Delaware 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. Delaware Right of First Refusal Clause for Shareholders' Agreement is a provision typically included in the shareholders' agreement of a company incorporated in Delaware. This clause grants existing shareholders the first opportunity to purchase additional shares before they can be sold to third parties. It is designed to protect the existing shareholders' ownership rights and maintain control over the company's ownership structure. The Delaware Right of First Refusal Clause ensures that when a shareholder intends to sell their shares to a third party, they must first offer those shares to existing shareholders in proportion to their current ownership. By exercising their right of first refusal, shareholders can choose to purchase the shares at the same price and on the same terms proposed by the third party buyer. This clause promotes stability in the shareholder base and prevents unwanted outside ownership. It allows existing shareholders to maintain control over strategic decision-making and ensures that any new shareholders align with the company's objectives and values. It also ensures the fair treatment of existing shareholders by offering them an opportunity to further invest in the company before new investors are sought. There are different types of Delaware Right of First Refusal Clauses commonly used in shareholders' agreements. These include: 1. Standard Right of First Refusal: This type grants existing shareholders the right to purchase additional shares before they can be sold to any third party. The shareholders have the option to accept or decline the offer to purchase. 2. Co-Sale Right: Along with the right of first refusal, this type allows existing shareholders to sell their shares proportionately to a third-party buyer if another shareholder decides to sell their shares. 3. Right of First Negotiation: This type requires the shareholder intending to sell their shares to first negotiate with the existing shareholders. If no agreement is reached, then the shares can be sold to a third party. 4. Right of Last Offer: This type gives existing shareholders the right to match or exceed the price offered by a third-party buyer after the shareholder has already accepted the third party's offer. In conclusion, the Delaware Right of First Refusal Clause is an essential provision in a shareholders' agreement, granting existing shareholders the first opportunity to purchase additional shares. Its inclusion ensures the preservation of ownership rights and control over a company's ownership structure. The different types of Delaware Right of First Refusal Clauses allow for various approaches in granting this right, providing flexibility to suit the specific needs and preferences of the shareholders and the company.

Delaware Right of First Refusal Clause for Shareholders' Agreement is a provision typically included in the shareholders' agreement of a company incorporated in Delaware. This clause grants existing shareholders the first opportunity to purchase additional shares before they can be sold to third parties. It is designed to protect the existing shareholders' ownership rights and maintain control over the company's ownership structure. The Delaware Right of First Refusal Clause ensures that when a shareholder intends to sell their shares to a third party, they must first offer those shares to existing shareholders in proportion to their current ownership. By exercising their right of first refusal, shareholders can choose to purchase the shares at the same price and on the same terms proposed by the third party buyer. This clause promotes stability in the shareholder base and prevents unwanted outside ownership. It allows existing shareholders to maintain control over strategic decision-making and ensures that any new shareholders align with the company's objectives and values. It also ensures the fair treatment of existing shareholders by offering them an opportunity to further invest in the company before new investors are sought. There are different types of Delaware Right of First Refusal Clauses commonly used in shareholders' agreements. These include: 1. Standard Right of First Refusal: This type grants existing shareholders the right to purchase additional shares before they can be sold to any third party. The shareholders have the option to accept or decline the offer to purchase. 2. Co-Sale Right: Along with the right of first refusal, this type allows existing shareholders to sell their shares proportionately to a third-party buyer if another shareholder decides to sell their shares. 3. Right of First Negotiation: This type requires the shareholder intending to sell their shares to first negotiate with the existing shareholders. If no agreement is reached, then the shares can be sold to a third party. 4. Right of Last Offer: This type gives existing shareholders the right to match or exceed the price offered by a third-party buyer after the shareholder has already accepted the third party's offer. In conclusion, the Delaware Right of First Refusal Clause is an essential provision in a shareholders' agreement, granting existing shareholders the first opportunity to purchase additional shares. Its inclusion ensures the preservation of ownership rights and control over a company's ownership structure. The different types of Delaware Right of First Refusal Clauses allow for various approaches in granting this right, providing flexibility to suit the specific needs and preferences of the shareholders and the company.