A right of participation is a provision or clause in an agreement allowing a majority shareholder to compel a minority shareholder to participate in the sale of a business. The majority owner who conducts the traction must give the minority shareholder the same price, conditions and conditions as any other seller. HOWEVER, THIS AGREEMENT certifies that, taking into account the premises and mutual agreements and understandings, the parties agree as follows: sleight of hand rights may be introduced through capital raising or during merger and acquisition negotiations. For example, when a tech startup opens a Series A investment cycle, it does so to sell ownership of the company to a venture capital firm for a capital injection. In this particular example, the majority belongs to the company`s Chief Executive Officer (CEO), who owns 51% of the company`s shares. The CEO wants to retain majority control and protect himself even in the event of a possible sale. To do this, he negotiates a towing right with the offer of shares to a venture capital company which gives him the right to force the venture capital company to sell its stake in the company if ever a buyer comes forward. C. Pat, Chris, Jean and Mikey are all its shareholders and the authorized capital of the company consists of an unlimited number of common shares with no par value, the following of which are issued and considered fully paid-up and ineligible: Tag Along rights are also called “co-sale rights” and are the opposite of sleight of hand rights. When a majority shareholder sells his shares, one day along the right entitles the minority shareholder to participate simultaneously in the sale at the same price for the shares.
The minority shareholder then “tagge” with the sale of the majority shareholder. Tag Along rights are usually formulated in such a way that any attempt to purchase shares of the company is invalid and will not be registered if Tag Along procedures are not followed. Towing rights are triggered for all types of sales transactions, such as mergers and acquisitions or a change of control within the company. The majority shareholder`s share of the shares depends on the range of owners of the company and the negotiating strength of the shareholders, but is normally between 51% and 75%. A towing of the right allows a majority shareholder of a company to force the remaining minority shareholders to accept an offer to purchase the entire company by a third party. The majority shareholder who “trails” the other shareholders must offer minority shareholders the same price and conditions as those offered to the majority shareholder. . . .