Connecticut 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. Connecticut Right of First Refusal Clause for Shareholders' Agreement is a legal provision that grants existing shareholders the first opportunity to purchase additional shares of a company before they are offered to external parties. This clause aims to protect the interests of current shareholders by ensuring they have the opportunity to maintain or increase their ownership stake in the company. In Connecticut, there are two types of Right of First Refusal (ROAR) clauses commonly used in Shareholders' Agreements. These are: 1. Standard Right of First Refusal Clause: This clause allows existing shareholders to exercise their right to purchase additional shares proportionally to their existing ownership percentage. If a shareholder receives an offer to buy shares from a third party, they must first offer those shares to the existing shareholders at a price and on the same terms as the third-party offer. Existing shareholders then have the option to accept or decline the offer within a specified timeframe. 2. Enhanced Right of First Refusal Clause: This clause goes beyond the standard ROAR clause and gives existing shareholders the right to match or better any offer received by a shareholder from an external party. In this case, if a shareholder intends to sell their shares to a third party, they must first notify the company and provide details of the third-party offer. Existing shareholders then have the opportunity to make a counteroffer within a specified timeframe, matching or exceeding the terms offered by the external party. The selling shareholder can only proceed with the sale to the third party if no existing shareholder exercises their right to match or better the offer. The Connecticut Right of First Refusal Clause for Shareholders' Agreement provides a mechanism for existing shareholders to maintain control over the ownership structure of a company. By giving them priority in purchasing additional shares or matching external offers, this clause ensures that the ownership remains within the existing shareholder base, preventing dilution or unwanted third-party involvement. In summary, the Connecticut Right of First Refusal Clause for Shareholders' Agreement grants existing shareholders the first opportunity to purchase additional shares or match external offers. This provision aims to safeguard shareholders' ownership and control over the company, playing a vital role in shaping the dynamics of ownership within Connecticut corporations.

Connecticut Right of First Refusal Clause for Shareholders' Agreement is a legal provision that grants existing shareholders the first opportunity to purchase additional shares of a company before they are offered to external parties. This clause aims to protect the interests of current shareholders by ensuring they have the opportunity to maintain or increase their ownership stake in the company. In Connecticut, there are two types of Right of First Refusal (ROAR) clauses commonly used in Shareholders' Agreements. These are: 1. Standard Right of First Refusal Clause: This clause allows existing shareholders to exercise their right to purchase additional shares proportionally to their existing ownership percentage. If a shareholder receives an offer to buy shares from a third party, they must first offer those shares to the existing shareholders at a price and on the same terms as the third-party offer. Existing shareholders then have the option to accept or decline the offer within a specified timeframe. 2. Enhanced Right of First Refusal Clause: This clause goes beyond the standard ROAR clause and gives existing shareholders the right to match or better any offer received by a shareholder from an external party. In this case, if a shareholder intends to sell their shares to a third party, they must first notify the company and provide details of the third-party offer. Existing shareholders then have the opportunity to make a counteroffer within a specified timeframe, matching or exceeding the terms offered by the external party. The selling shareholder can only proceed with the sale to the third party if no existing shareholder exercises their right to match or better the offer. The Connecticut Right of First Refusal Clause for Shareholders' Agreement provides a mechanism for existing shareholders to maintain control over the ownership structure of a company. By giving them priority in purchasing additional shares or matching external offers, this clause ensures that the ownership remains within the existing shareholder base, preventing dilution or unwanted third-party involvement. In summary, the Connecticut Right of First Refusal Clause for Shareholders' Agreement grants existing shareholders the first opportunity to purchase additional shares or match external offers. This provision aims to safeguard shareholders' ownership and control over the company, playing a vital role in shaping the dynamics of ownership within Connecticut corporations.