Mississippi 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. A Mississippi Right of First Refusal Clause for a Shareholders' Agreement is a legal provision that outlines the rights and obligations of shareholders in a corporation when there is a proposed sale or transfer of shares by an existing shareholder. This clause aims to protect shareholders' interests and ensure transparency and fairness in the sale or transfer process. The primary purpose of the Right of First Refusal Clause is to provide existing shareholders with the opportunity to purchase the shares being sold or transferred before they are offered to outside parties. This gives shareholders the chance to maintain their ownership percentages and protect their investment in the company. In Mississippi, there are two types of Right of First Refusal Clauses commonly used in Shareholders' Agreements: 1. Right of First Refusal (ROAR): This type of clause grants existing shareholders the right to match the terms offered by a third-party buyer or transferee. If a shareholder intends to sell or transfer their shares, they must first notify the other shareholders, who then have the option to exercise their right to purchase the shares on the same terms. 2. Right of First Offer (ROFL): This clause provides existing shareholders with the first opportunity to make an offer on the shares being sold or transferred. However, unlike the ROAR clause, the shareholder's offer does not have to match the terms of any competing offers. Instead, the selling shareholder has the discretion to accept or reject the offer made by the existing shareholder. When drafting a Mississippi Right of First Refusal Clause, it is essential to include detailed provisions regarding the notice period for shareholders to exercise their rights, the procedure for accepting or rejecting offers, and any restrictions on the transfer of shares to non-shareholders. This clause can help maintain stability within a corporation by limiting the entry of new shareholders who may not align with the company's objectives or culture. Additionally, it ensures that existing shareholders are given a fair chance to maintain or increase their ownership stakes if they desire. Overall, a Mississippi Right of First Refusal Clause for a Shareholders' Agreement serves as a protective mechanism that safeguards the interests of shareholders and contributes to the smooth functioning and growth of the corporation.

A Mississippi Right of First Refusal Clause for a Shareholders' Agreement is a legal provision that outlines the rights and obligations of shareholders in a corporation when there is a proposed sale or transfer of shares by an existing shareholder. This clause aims to protect shareholders' interests and ensure transparency and fairness in the sale or transfer process. The primary purpose of the Right of First Refusal Clause is to provide existing shareholders with the opportunity to purchase the shares being sold or transferred before they are offered to outside parties. This gives shareholders the chance to maintain their ownership percentages and protect their investment in the company. In Mississippi, there are two types of Right of First Refusal Clauses commonly used in Shareholders' Agreements: 1. Right of First Refusal (ROAR): This type of clause grants existing shareholders the right to match the terms offered by a third-party buyer or transferee. If a shareholder intends to sell or transfer their shares, they must first notify the other shareholders, who then have the option to exercise their right to purchase the shares on the same terms. 2. Right of First Offer (ROFL): This clause provides existing shareholders with the first opportunity to make an offer on the shares being sold or transferred. However, unlike the ROAR clause, the shareholder's offer does not have to match the terms of any competing offers. Instead, the selling shareholder has the discretion to accept or reject the offer made by the existing shareholder. When drafting a Mississippi Right of First Refusal Clause, it is essential to include detailed provisions regarding the notice period for shareholders to exercise their rights, the procedure for accepting or rejecting offers, and any restrictions on the transfer of shares to non-shareholders. This clause can help maintain stability within a corporation by limiting the entry of new shareholders who may not align with the company's objectives or culture. Additionally, it ensures that existing shareholders are given a fair chance to maintain or increase their ownership stakes if they desire. Overall, a Mississippi Right of First Refusal Clause for a Shareholders' Agreement serves as a protective mechanism that safeguards the interests of shareholders and contributes to the smooth functioning and growth of the corporation.