Tag along rights Definition

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GLOSSARY

Published by a ��Ƶ Corporate expert

What does Tag along rights mean?

Sometimes referred to as piggy back rights. They enable certain shareholders (usually minority shareholders) to force other shareholders who wish to sell their shares (or a percentage of their shares usually representing a majority interest) to procure an offer for the shares benefiting from the rights at the same time and at the same price per share. The tag along rights act as protection for minority shareholders, including in case the majority shareholder chooses not to exercise its drag along rights (if applicable).

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Practical steps involved in implementing growth shares

Practical steps involved in implementing growth shares What are growth shares and are they appropriate? Growth shares, also known as value shares or hurdle shares, are a special class of shares that have restricted rights. These rights are designed to allow employees only to participate in post-acquisition increases in the value of the company. For more detailed explanation of the key features of growth shares and when they are normally introduced by a company, see Practice Note: Growth shares (value shares). Key features of growth shares Growth shares are specially constituted and classified under the articles of association of the company as a separate class of shares from the existing shares in the company. They will be issued to selected employees and will be subject to the provisions of the articles of association and also either to the subscription agreement that each participating employee will be asked to sign or the option documentation that they enter into, where the employee acquires their growth shares via an option over...

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Growth shares term sheet

Growth shares term sheet [INSERT NAME OF COMPANY] growth SHARES This term sheet summarises a proposal to incentivise key employees of [insert name of company] (referred to below as the ‘Company’) by allowing those employees to subscribe for a new class of shares in the Company (Growth Shares). All issues raised in this document are for discussion purposes and each should be considered carefully before implementation. 1 Overview Under the terms of the proposal, participants will subscribe directly for Growth Shares. The Growth Shares will have rights which are designed to allow employees to participate only in post-acquisition increases in the value of the Company in the event of an IPO or liquidation, or where more than [Insert percentage]% of the Company's ordinary shares are sold (in each case, referred to in this note as an ‘Exit’). When an Exit occurs, the Growth Shares will carry an entitlement to share in part of the Exit consideration, provided that the purchase price paid to shareholders of the Company...

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GLOSSARY