Tag archives: shareholder agreement

Threading the Needle: Drag-Along Clauses and Asset Deals

While continued economic uncertainty has dampened M&A activity in the past months, the transition from crisis management to recovery mode in the short to medium term will likely see many companies explore potential divestitures in an effort to dispose of underperforming assets, to increase cash on hand and business resiliency and to mitigate risk.

When seeking approval for divestitures, many companies that have a shareholders’ agreement in place rely on drag-along provisions contained therein to quickly approve the transaction. However, in the context of an asset sale, the applicability of a drag-along is not always clear and both sellers and … Continue Reading

Corporate governance 101: increasing minority shareholder voting power

If you are a minority shareholder you may feel a lack of control over corporate matters because majority shareholders, well, hold the majority of the voting rights. Certain shareholder agreements can help alleviate this lack of control and provide you with greater voting power.

Shareholder Agreements

Simply put, a shareholder agreement is a private contract between two or more shareholders of a corporation that supplements the corporation’s governing statute(s) and constating documents (i.e. articles of incorporation and by-laws). A shareholder agreement, particularly where it is not a unanimous shareholder agreement, should never contradict or conflict in any way with the … Continue Reading

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