Tag-Along Right

(redirected from Co-Sale Right)

Tag-Along Right

The contractually guaranteed right of a minority shareholder to sell his/her stake in a company if the majority shareholder does so. The tag-along rights further guarantee the exact same terms to the minority shareholder. This protects the minority shareholder from the possibility that a new majority owner will come along and ruin the company or take it in a direction disadvantageous to the minority shareholder. Tag-along rights are also called co-sale rights and are common in venture capital agreements.
References in periodicals archive ?
The rights and protections normally given venture capitalists buying preferred shares include the liquidation preference, dividend preference, voting rights, right of first refusal, co-sale rights and vesting on founders' shares.
Certain investors in NextPoint Networks have formally notified Safeguard that they will exercise their co-sale rights and will therefore participate in the sale of NextPoint Networks shares to Saints.
Quincy granted to HHB and Westgate certain co-sale rights.
In addition, the exercise of the warrants automatically terminated the company's stockholders' agreement, which gave preferential rights to certain shareholders, including Rights of First Refusal, Co-Sale Rights, Tag Along Rights, Preemptive Rights and the right to name directors.
In connection with this agreement and as a condition to closing, ThinkTank will enter into an agreement with GolfGear and Wyngate Ltd, a significant shareholder of GolfGear, providing both ThinkTank and Wyngate with certain rights of first offer, co-sale rights and piggy-back registration rights as well as a voting agreement which provides ThinkTank and Wyngate each the right to designate four of the eight designees on the board of directors.
Additionally, with respect to the DSI shares, there are co-sale rights in favor of the Endan Shareholders and drag-along rights in favor of DSSI.