Tag-along agreements are a part of shareholders’ agreements or may be special clauses included in the contract where the shareholders have something called tag along rights which are present to protect the interests of the minority shareholders. If the majority shareholders are selling their shares to a third party, the tag-along rights allow the minority shareholder to participate in the buy-out. This agreement is a legal idea in corporate law and makes sure that if the majority shareholders sell their shares, then the minority shareholders have the right to “tag along” or participate in the transaction.
So basically the minority shareholders can sell their shares at the same time as the majority shareholders and with the same terms and conditions. Some people are against tag-along agreements as it could affect a sale, but by adding this clause, one can ensure a win-win situation for all shareholders and the minority shareholders also get the benefits of any big transaction taking place between the buyer and seller.
Sample Tag-Along Agreement
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