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Rajah Lehal

Drag-along Provisions Allow for Future Flexibility

February 13, 2016

Links from this article: Read the article here. here!

If there is a bona fide takeover bid from a third party, a majority of the shareholders can agree to the take-over on behalf of all shareholders due to the drag-along provisions. These provisions require the remaining shareholders to sell all of their shares to the third-party acquiror. Any remaining shareholder who fails to comply with the drag-along will be subject to the exercise of a power of attorney designed to allow the majority shareholders to complete the takeover bid.

Read the article here.Take away:

  • A company needs to be prepared for all future scenarios including takeover scenarios, and drag-along provisions are part of that preparation.

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Written by Rajah. Rajah Lehal is Founder and CEO of Clausehound.com. Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.