Send Tag-Along Agreement via USPS

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Aug 6th, 2022
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How to Send Tag-Along Agreement via USPS

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Most shareholder agreements include restrictions on the sale or transfer of shares to prevent unwanted partnerships. For instance, if a business partner wants to sell their shares, you could end up with a stranger as a partner, which is undesirable. To avoid this, shareholder agreements typically employ several mechanisms: 1. Right of First Refusal - gives existing shareholders the first opportunity to purchase the shares before they are sold to an outside party. 2. Preemptive Right - allows existing shareholders the first chance to buy new shares issued by the corporation.3. Tag-Along Right (or Piggyback Right) - enables minority shareholders to join in on a sale if a majority shareholder decides to sell their shares. These mechanisms protect the interests of existing shareholders.

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A tag along clause gives minority shareholders the right to seek a sale for themselves under the same terms with the same buyer when a majority shareholder is selling their portion of shares.
For example, if you own 10% of the companys shares and you have a tag along right, you would be given the opportunity to sell 10% of the total parcel of shares that are being sold. This type of clause would typically result in shareholders selling some of their shares, but none of them being able to sell all of them.
For example, a majority shareholder who holds 75% of the shares in the company who agrees to sell their shares in a share sale to a potential buyer, must offer the same price for the shares to the minority shareholders if they want to drag them along.
Co-sale rights often have built-in limits on when a shareholder can use them. For instance, majority shareholders and founders can sell or transfer stock to family members. If they die, the stock can transfer to their estate and heirs.
The phrase Tag Along means to follow along after someone; to go along with someone. Example of Use: The family dog tagged along after the children wherever they went.
Tag-along rights also referred to as co-sale rights, are contractual obligations used to protect a minority shareholder, usually in a venture capital deal. If a majority shareholder sells his stake, it gives the minority shareholder the right to join the transaction and sell their minority stake in the company.
The tag along rights act as protection for the minority holders, allowing them to sell their shares at the same time and at the same price per share, including in case the majority chooses not to exercise its drag along rights.
The phrase Tag Along means to follow along after someone; to go along with someone. Example of Use: The family dog tagged along after the children wherever they went.
What is a tag along clause? A tag along or take along provision gives a minority shareholder the right (but not the obligation) to have his shares bought on the same terms (including price) as majority shareholders.
Whereas a tag along clause provides protection to small investors, a drag along provision protects the interests of the major shareholder(s). A drag along clause allows a large shareholder (or group of shareholders) to drag the other shareholders into a joint sale of the entire venture.

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