Tag Along Rights

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Home Startup Terms Glossary Tag Along Rights

What is Tag Along Rights?

Tag along rights is designed to protect minority shareholders. This rule says that in the event that a majority shareholder decides to sell their stake in a company, minority shareholders have the right to offer up their shares in combination with the majority stockholders’. These rights are pre-determined at the time a minority shareholder purchases securities in a company and is written into their contract.

Tag Along Rights Examples

Examples of tag along rights:

  • Example 1. Typically applies to venture deals
  • Example 2. Prevalent in startup companies
  • Example 3. Gives minority shareholders more liquidity

Here’s another web page about tag along rights.

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