Kentucky 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 Kentucky Right of First Refusal Clause for Shareholders' Agreement is a crucial provision that outlines the rights and obligations of shareholders when one shareholder intends to sell or transfer their shares in a company. It gives existing shareholders the opportunity to purchase the shares before they are sold to a third party. This clause is included in the shareholders' agreement to protect the interests of current shareholders by ensuring that they have the first chance to buy additional shares and maintain control and ownership within the company. There are two main types of Kentucky Right of First Refusal Clauses for Shareholders' Agreement: 1. Standard Right of First Refusal: This type of clause grants existing shareholders the right to match any offer made by a third party to purchase shares being sold by another shareholder. Upon receiving an offer, the shareholder intending to sell must notify the existing shareholders, who then have a specified period to decide whether they want to purchase the shares at the same terms as the third party offer. 2. Right of First Offer: Unlike the standard right of first refusal, this clause gives existing shareholders the right to make an offer to purchase shares before any third party offers are considered. In this case, the shareholder intending to sell must first notify the existing shareholders of their intention to sell the shares, and the existing shareholders can then decide whether they want to make an offer to purchase the shares. Both types of clauses aim to provide existing shareholders with the opportunity to maintain their ownership percentage and prevent dilution of their voting rights. These clauses also provide a fair and orderly process for shareholders to conduct transactions involving the transfer of shares, ensuring transparency and minimizing conflicts of interest. It is essential for shareholders to clearly define the terms and conditions related to the Kentucky Right of First Refusal Clause in their shareholders' agreement, including the notice period, pricing mechanism, and procedures for exercising the right. By doing so, they can navigate the sale or transfer of shares with confidence, aligning the interests of all shareholders while preserving the stability and continuity of the company.

The Kentucky Right of First Refusal Clause for Shareholders' Agreement is a crucial provision that outlines the rights and obligations of shareholders when one shareholder intends to sell or transfer their shares in a company. It gives existing shareholders the opportunity to purchase the shares before they are sold to a third party. This clause is included in the shareholders' agreement to protect the interests of current shareholders by ensuring that they have the first chance to buy additional shares and maintain control and ownership within the company. There are two main types of Kentucky Right of First Refusal Clauses for Shareholders' Agreement: 1. Standard Right of First Refusal: This type of clause grants existing shareholders the right to match any offer made by a third party to purchase shares being sold by another shareholder. Upon receiving an offer, the shareholder intending to sell must notify the existing shareholders, who then have a specified period to decide whether they want to purchase the shares at the same terms as the third party offer. 2. Right of First Offer: Unlike the standard right of first refusal, this clause gives existing shareholders the right to make an offer to purchase shares before any third party offers are considered. In this case, the shareholder intending to sell must first notify the existing shareholders of their intention to sell the shares, and the existing shareholders can then decide whether they want to make an offer to purchase the shares. Both types of clauses aim to provide existing shareholders with the opportunity to maintain their ownership percentage and prevent dilution of their voting rights. These clauses also provide a fair and orderly process for shareholders to conduct transactions involving the transfer of shares, ensuring transparency and minimizing conflicts of interest. It is essential for shareholders to clearly define the terms and conditions related to the Kentucky Right of First Refusal Clause in their shareholders' agreement, including the notice period, pricing mechanism, and procedures for exercising the right. By doing so, they can navigate the sale or transfer of shares with confidence, aligning the interests of all shareholders while preserving the stability and continuity of the company.