It is common for shareholders of a closely held corporation to set out the rules that govern their relationship vis-à-vis one another in the form of a shareholder agreement. One key concern for shareholders when negotiating a shareholder agreement is controlling the transfer of shares to unknown or undesirable persons, while still maintaining liquidity in their shares. A common mechanism used to address this concern is a right of first refusal (ROFR).

Right of first refusal

A ROFR provides non-selling shareholders with the right to accept or refuse an offer by a selling shareholder after the selling shareholder … Continue Reading