Drag-Along Rights

Glossary

Drag-Along Rights

Drag-along rights are a provision in a shareholders’ agreement that enables majority shareholders to compel the minority shareholders to participate in the sale of a company. The purpose of this right is to ensure that a sale to a potential buyer can take place even if some small shareholders don’t agree to the terms, by “dragging” them along to the sale. All shareholders must sell on the same terms in such circumstances.

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