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.