drag-along rights

Drag-Along Rights

The right of majority shareholders to force minority shareholders to sell their shares to a third party or to liquidate the company. Majority shareholders may exercise drag-along rights if a potential buyer will only agree to purchase 100% of a company.

drag-along rights

The right of majority shareholders to force minority shareholders to join in a sale of a company. These rights allow majority shareholders to complete a sale in the event a buyer wants to own 100% of the firm.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

References in periodicals archive ?

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right of first refusal, tag-along or drag-along rights. The Reserve Bank has treated the put options as debt in the hands of foreign investors which have to comply with External Commercial Borrowing norms.

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However, many other alternatives might be considered, such as preemption rights, sales to outsiders, transfers to group companies, put options, call options, and tag-along and drag-along rights. Some of these rights are described in Figure 2.

Drag-along rights One partner (usually the majority shareholder) can arrange a sale to an outsider and then force the other partner to sell its shares as well (usually at the same price and on the same terms).