Legal & Compliance
Tag-Along Rights
Rights allowing minority shareholders to join a sale when majority shareholders sell their shares, ensuring equal treatment in a transaction.
Tag-along rights (or co-sale rights) give minority shareholders the right to participate in a sale of shares by majority shareholders on the same terms. If a founder or majority investor sells their shares to a third party, tag-along rights allow other shareholders to 'tag along' and sell their shares proportionally at the same price and terms. Tag-along rights protect minority investors (angels, employees) from being left behind when insiders negotiate a deal. They ensure that if majority shareholders get an attractive exit opportunity, minority shareholders get access to the same opportunity. Tag-along rights are standard in VC investment agreements and are distinct from drag-along rights (which compel minority shareholders to sell).