Tag-Along Right

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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 ?
IQ will also benefit from tag along rights in connection with a sale by Bombardier of its interest in the partnership.
Spain's Telefonica SA (BME:TEF), which agreed in early June to buy Promotora de Informaciones SA's (BME:PRS), or Prisa, 56% in TV company Distribuidora de Television Digital SA (DTS), announced an extension until 4 July to the period allowed to DTS' shareholder Mediaset Espana Comunicacion SA (BME:TL5) to exercise its pre-emption and tag along rights over Prisa's stake provided under a shareholder accord.
20 June 2014 - Spain's Telefonica SA (BME:TEF), which agreed in early June to buy Promotora de Informaciones SA's (BME:PRS), or Prisa, 56% in TV company Distribuidora de Television Digital SA (DTS), announced today an extension until 4 July to the period allowed to DTS' shareholder Mediaset Espana Comunicacion SA (BME:TL5) to exercise its pre-emption and tag along rights over Prisa's stake provided under a shareholder accord.
A tag right generally benefits a minority shareholder operating (typically other than where a transferor has exercised a drag along right) on any proposed transfer of a certain percentage of shares so that the minority holders have tag along rights to sell all/the same proportion of their interests to the purchaser.
Requirements for the status to be valid The employer has an obligation to provide a written statement to the individual setting out the full details of the loss of his employment rights, the shares and the rights attached to them including whether the shares are subject to any drag or tag along rights.
tag along rights granted to minority shareholders beyond what is required by law;
Our third governance variable (Superior Tag Along Rights) takes on a value of 1 if the company's bylaws grant minority shareholders tag along rights beyond the minimum legal requirement, and 0 otherwise.
The law required tag along rights only to shareholders with voting shares.
This first article of this edition is a text by Richard Saito and Alexandre Di Miceli da Silveira entitled The Relevance of Tag along Rights and Identity of Controlling Shareholders for the Price Spreads between Dual-Class Shares: the Brazilian Case.
Furthermore, the Addendum refers to the parties' rights offirst refusal, Tag Along rights, Buy-Me-Buy-You rights, Nomination ofDirectors, Nomination of Managers and Advisors, voting rights on certainmanners as well as additional provisions in the instance of sellingcontrolling shares in the Company.
Some, called tag along rights, protect minority shareholders by ensuring they can sell their shares at the same price as the majority shareholders in a takeover.
In sum, the Brazilian case is interesting for three reasons: i) the issuance of non-voting shares is widespread; ii) there is a large wedge between voting rights and cash flow rights held by controlling shareholders (10); and, iii) the country witnessed exogenous events (two changes in corporate law) as well as endogenous ones (voluntary granting of tag along rights by firms willing to improve their corporate governance practices) that changed the level of tag along rights throughout the research period (1995 to 2006).