The Texas Right of First Refusal Clause for Shareholders' Agreement is a provision designed to protect the rights of existing shareholders in a corporation when new shares are issued or when existing shares are transferred. It gives the existing shareholders the first opportunity to purchase the newly issued or transferred shares before they can be offered to others. Under the Texas Right of First Refusal Clause, if a shareholder intends to sell or transfer their shares, they must first offer them to the existing shareholders at a price and on terms no less favorable than what they have agreed upon with a potential buyer. The existing shareholders then have the right to either accept the offer and purchase the shares or waive their right, allowing the shareholder to proceed with the transfer to the potential buyer. The purpose of this clause is to maintain the control and stability of the corporation by ensuring that existing shareholders have the opportunity to maintain their ownership percentage and prevent unwanted or unknown shareholders from gaining control. There are different variations of the Texas Right of First Refusal Clause that can be included in a Shareholders' Agreement: 1. Basic Right of First Refusal: This clause grants existing shareholders the right to purchase newly issued or transferred shares on the same terms as offered to an outside party, providing them with the first opportunity to increase their ownership stake. 2. Right of First Offer: This clause requires a shareholder who intends to sell their shares to first offer them to existing shareholders at a specified price before seeking buyers elsewhere. However, unlike the basic right of first refusal, existing shareholders are not obligated to match or exceed the offer; they simply have the first opportunity to make an offer. 3. Right of First Negotiation: This clause requires the shareholder intending to sell their shares to engage in negotiations with existing shareholders before offering them to outside parties. The goal is to facilitate discussions and give existing shareholders the chance to present a competitive offer. 4. Right of First Refusal with Tag-Along and Drag-Along Rights: This clause not only grants existing shareholders the right of first refusal but also includes additional provisions that allow minority shareholders to "tag along" and sell their shares along with the majority seller or "drag along" the minority shareholders to sell their shares along with the majority seller to a third party. This helps maintain the harmony and control of the corporation during share transfers. 5. Right of First Refusal with Prorate Allocation: This clause ensures that existing shareholders can participate in new share offerings on a pro rata basis, based on their existing ownership percentage. This way, they have the right to maintain their proportionate ownership stake. In summary, the Texas Right of First Refusal Clause for Shareholders' Agreement grants existing shareholders the first opportunity to purchase newly issued or transferred shares, protecting their ownership interests and providing stability to the corporation. Different variations of this clause can be included in a Shareholders' Agreement, depending on the specific preferences and needs of the shareholders involved.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.Texas Cláusula de Derecho de Preferencia para Acuerdo de Accionistas - Right of First Refusal Clause for Shareholders' Agreement
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FAQ
A right of first refusal in Texas real estate law is a written agreement by which the holder of the right possesses a future option to purchase property prior to its sale to a third party.
The right of first refusal is usually triggered when a third party offers to buy or lease the property owner's asset. Before the property owner accepts this offer, the property holder (the person with the right of first refusal) must be allowed to buy or lease the asset under the same terms offered by the third party.
The value of the right of first refusal to the holder at the time an offer was made by a third party should be the difference between the inherent value assumed by the assignee and the offering price by the third party.
Once that is done the ROFR holder has the option of purchasing the property instead or waiving their ROFR and allowing another sale to go through. To get to closing, a title company has to have a signed Waiver of Right of First Refusal document in the file before funding can occur.
A right of first refusal (ROFR) is an option contract whereby the holder of the right has the future option to purchase property when the owner intends to sell it. The holder of the ROFR has the right to purchase the property prior to any other third party who seeks to purchase it.
When some of the shareholders wish to sell their share, a clause in the shareholder's agreement should state that the shareholders who wish to sell their shares have to show the right to match an offer received from a third party. This is known as the right of first refusal.
Right of first refusal (ROFR), also known as first right of refusal, is a contractual right to enter into a business transaction with a person or company before anyone else can. If the party with this right declines to enter into a transaction, the obligor is free to entertain other offers.
THE TAKEAWAY A right of first refusal is an agreement between a property owner and a second party who wants to have the first chance to purchase the property when it comes on the mar- ket. The agreement is triggered when the owner receives a third-party offer to buy the property.
Right of first refusal (ROFR), also known as first right of refusal, is a contractual right to enter into a business transaction with a person or company before anyone else can. If the party with this right declines to enter into a transaction, the obligor is free to entertain other offers.
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