Cosale Agreement

6. Dezember 2020

The right of pre-emption and the co-purchase contract regulate how and to whom founders and employees can sell their shares. The ROFR/Co-Sale contract rarely receives more than superficial comments in typical business financing. Definition A co-sale agreement (co-sale rights or tag-along provisions) in an appointment sheet gives a group of shareholders the right to sell their shares when another group does so, under the same conditions. In the case of venture capital transactions, these clauses are generally used to ensure that investors can participate, on a pro-rata basis, in all sales of creators or other shareholders that exceed a certain percentage of ownership. It is not uncommon for preferred investors to require start-up creators to enter into a co-sale contract. Co-sale rights give investors the right to participate in a transaction when founders sell their shares to third parties. The co-sale rights, also known as Tag Along rights, allow investors to sell their shares under the same terms as the founders. It is not uncommon for preferred investors to require start-up creators to enter into a co-sale contract. Co-sale rights entitle investors,…

The email address cannot be subscribed. Please, do it again. XYZ also talks to a venture capital firm that agrees to invest so much money that it owns 55% of the business (which gives it a majority stake). You want to start his own business and become your own boss? You are not alone. According to the Labor Department, there are currently 14.7 million independent Americans. If you`ve lost recently… In the event that the company proposes the transfer of shares, the company has the right to purchase the shares on the same terms as the proposed assignment. If the company does not exercise its prerogative, Preferred holders have a reference right (in proportion to the privileged holders) with respect to the proposed transfer. [The rights to purchase unsubs purchased shares are redistributed in proportion to other legitimate preferred holders.] To the extent that the rights of the first refusal are not exercised, Preferred holders have the right to participate in the proposed transfer on a pro-rata basis (as for the purchaser and the owners of privileged persons). Initial refusal and co-sale rights are subject to the usual exceptions and end with an IPO.

Co-sale rights are generally good for minority shareholders because they can benefit from an agreement that another shareholder can enter into. In particular, a majority shareholder may have access to potential buyers and negotiate terms or prices that are better than minority shareholders. In addition, it can be difficult to find buyers for shares of private companies; Co-sale rights allow minority shareholders to seize a chance to obtain cash.