Iowa 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 Iowa Right of First Refusal Clause for Shareholders' Agreement is a legal provision that grants existing shareholders the priority to purchase any shares that another shareholder intends to sell. This clause is vital in maintaining the control and stability within a corporation and protecting the shareholders' interests. The primary purpose of the Right of First Refusal Clause is to prevent unwanted parties from becoming shareholders without the consent of the current shareholders. By providing existing shareholders with the option to purchase shares before they are sold to external parties, this clause ensures that the ownership remains within the control of the current shareholders. In Iowa, there are various types of Right of First Refusal Clauses for Shareholders' Agreements, which include: 1. Standard Right of First Refusal: This clause mandates that if a shareholder decides to sell their shares, they must offer them to the existing shareholders first before seeking external buyers. The existing shareholders have the opportunity to purchase the offered shares at the same price and on the same terms as the potential external buyer. 2. Piggyback Right of First Refusal: This clause comes into play when a shareholder receives an offer from an external party to purchase their shares. In such cases, the shareholder must offer the existing shareholders the opportunity to purchase their shares on the same terms and conditions as the external offer. If the existing shareholders decline the offer, the selling shareholder is then free to proceed with the external sale. 3. Qualified Right of First Refusal: This type of clause provides existing shareholders with the right to match the terms and conditions offered by an external buyer. However, if the proposed terms are not satisfactory to the existing shareholders, they can waive their right to purchase, allowing the selling shareholder to proceed with the external sale. 4. Right of First Offer: This clause compels a shareholder looking to sell their shares to first present the terms of the sale to the existing shareholders. The existing shareholders have the opportunity to make an initial offer and negotiate with the selling shareholder before considering external buyers. In conclusion, the Iowa Right of First Refusal Clause for Shareholders' Agreement is a crucial legal provision that ensures existing shareholders have the option to purchase shares before they are sold to external parties. It helps safeguard the control and stability of a corporation, protecting the interests of the shareholders.

The Iowa Right of First Refusal Clause for Shareholders' Agreement is a legal provision that grants existing shareholders the priority to purchase any shares that another shareholder intends to sell. This clause is vital in maintaining the control and stability within a corporation and protecting the shareholders' interests. The primary purpose of the Right of First Refusal Clause is to prevent unwanted parties from becoming shareholders without the consent of the current shareholders. By providing existing shareholders with the option to purchase shares before they are sold to external parties, this clause ensures that the ownership remains within the control of the current shareholders. In Iowa, there are various types of Right of First Refusal Clauses for Shareholders' Agreements, which include: 1. Standard Right of First Refusal: This clause mandates that if a shareholder decides to sell their shares, they must offer them to the existing shareholders first before seeking external buyers. The existing shareholders have the opportunity to purchase the offered shares at the same price and on the same terms as the potential external buyer. 2. Piggyback Right of First Refusal: This clause comes into play when a shareholder receives an offer from an external party to purchase their shares. In such cases, the shareholder must offer the existing shareholders the opportunity to purchase their shares on the same terms and conditions as the external offer. If the existing shareholders decline the offer, the selling shareholder is then free to proceed with the external sale. 3. Qualified Right of First Refusal: This type of clause provides existing shareholders with the right to match the terms and conditions offered by an external buyer. However, if the proposed terms are not satisfactory to the existing shareholders, they can waive their right to purchase, allowing the selling shareholder to proceed with the external sale. 4. Right of First Offer: This clause compels a shareholder looking to sell their shares to first present the terms of the sale to the existing shareholders. The existing shareholders have the opportunity to make an initial offer and negotiate with the selling shareholder before considering external buyers. In conclusion, the Iowa Right of First Refusal Clause for Shareholders' Agreement is a crucial legal provision that ensures existing shareholders have the option to purchase shares before they are sold to external parties. It helps safeguard the control and stability of a corporation, protecting the interests of the shareholders.