Drag-Along Rights: A crucial mechanism in investment agreements

February 14, 2024

Drag-along rights enable majority shareholders to oblige minority shareholders to sell their shares on the same terms in the event of a company sale. These rights protect the interests of the majority shareholders by ensuring that a sale cannot be blocked by the rejection of minority shareholders, thus facilitating a smooth transfer of ownership. Drag-along rights are an essential element in shareholder agreements that simplify the implementation of strategic decisions such as company sales and increase the attractiveness of the company for potential buyers.