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Drag-Along Rights
A contractual agreement that obligates minority shareholders to sell their shares if the majority shareholder sells theirs, ensuring full control transfer to the buyer.
Implications
(Same as Drag-Along Right above) A provision in shareholder agreements that allows majority shareholders to compel minority shareholders to sell their stakes in the event of a sale, ensuring that the transaction can proceed smoothly.
Example
Example: During a company sale, majority shareholders invoke drag-along rights to ensure that all shares are sold to the buyer, preventing minority shareholders from holding up the deal.
Related Terms
Same as above.
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