Tag-along right

Tag-along right (TAR) is a legal concept in corporate law.

Under the concept, if the majority shareholder(s) of an entity sells their stake, the remaining minority shareholders have the right to join the deal and to sell their shares at the same terms and conditions as the majority shareholder(s), and the new owner must purchase those interests as well.

This right protects minority shareholders from being potentially forced to sell their shares for less than the majority shareholder(s) (as, after the deal, they likely would have no ability to outvote the new owner(s) who would have majority control).[1] Tag-along rights are fairly standard terms in shareholders agreements.

The concept differs from the drag-along right, in that under the latter the minority shareholders must sell their interests (though they also obtain the same terms and conditions as the majority shareholder).

See also

References

  1. ↑ Tag-Along Rights


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