Arkansas Right of First Refusal Clause for Shareholders' Agreement

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-01770
• Format: Word; Rich Text

Description

This is a model clause for a shareholder's agreement addressing Right of First Refusal. If a shareholder wishes to sell shares, the company will be given notice and has the right to buy the shares during a certain limited time period. Adapt to fit your circumstances. The Arkansas Right of First Refusal Clause is an important provision included in a shareholders' agreement, specifically designed to protect the interests of shareholders in Arkansas. This clause ensures that existing shareholders have the first opportunity to purchase or acquire additional shares of the company before they are offered to external parties. It aims to maintain control and stability within the company by giving existing shareholders a chance to maintain or increase their ownership stakes. The Right of First Refusal Clause operates in such a way that if a shareholder decides to sell or transfer their shares, they are obligated to inform the other shareholders first. This clause is put in place to prevent external individuals or entities from obtaining shares without giving existing shareholders the opportunity to continue their investment or protect their equity. The share transfer process in Arkansas involving the Right of First Refusal Clause is as follows: when a shareholder receives an offer from a third party to purchase their shares, they must notify all other shareholders with the price and general terms of the offer. The other shareholders then have a specified period, usually within 30 to 60 days, to decide whether they wish to acquire the shares on the same terms as the offer. If one or more shareholders express their interest, the selling shareholder must sell their shares to the existing shareholders instead of proceeding with the external offer. There are also different variations or types of Right of First Refusal Clauses that can be included in a shareholders' agreement. One variation is the ROAR on a pro rata basis, where existing shareholders have the option to purchase additional shares in proportion to their existing ownership percentage. Another variation is the Right of First Offer (ROFL), where instead of being obligated to match external offers, existing shareholders have the first opportunity to make an offer to purchase the shares at a price determined by the selling shareholder. The inclusion of an Arkansas Right of First Refusal Clause in a shareholders' agreement is crucial for maintaining stability, control, and fairness within the company. It provides existing shareholders with the necessary protection and opportunities to preserve their investments and influence within the business.

The Arkansas Right of First Refusal Clause is an important provision included in a shareholders' agreement, specifically designed to protect the interests of shareholders in Arkansas. This clause ensures that existing shareholders have the first opportunity to purchase or acquire additional shares of the company before they are offered to external parties. It aims to maintain control and stability within the company by giving existing shareholders a chance to maintain or increase their ownership stakes. The Right of First Refusal Clause operates in such a way that if a shareholder decides to sell or transfer their shares, they are obligated to inform the other shareholders first. This clause is put in place to prevent external individuals or entities from obtaining shares without giving existing shareholders the opportunity to continue their investment or protect their equity. The share transfer process in Arkansas involving the Right of First Refusal Clause is as follows: when a shareholder receives an offer from a third party to purchase their shares, they must notify all other shareholders with the price and general terms of the offer. The other shareholders then have a specified period, usually within 30 to 60 days, to decide whether they wish to acquire the shares on the same terms as the offer. If one or more shareholders express their interest, the selling shareholder must sell their shares to the existing shareholders instead of proceeding with the external offer. There are also different variations or types of Right of First Refusal Clauses that can be included in a shareholders' agreement. One variation is the ROAR on a pro rata basis, where existing shareholders have the option to purchase additional shares in proportion to their existing ownership percentage. Another variation is the Right of First Offer (ROFL), where instead of being obligated to match external offers, existing shareholders have the first opportunity to make an offer to purchase the shares at a price determined by the selling shareholder. The inclusion of an Arkansas Right of First Refusal Clause in a shareholders' agreement is crucial for maintaining stability, control, and fairness within the company. It provides existing shareholders with the necessary protection and opportunities to preserve their investments and influence within the business.