North Dakota 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 North Dakota Right of First Refusal Clause for Shareholders' Agreement is a crucial provision designed to protect shareholders' rights and ensure that they have the opportunity to purchase additional shares in the company before they can be sold or transferred to third parties. This clause grants existing shareholders the first opportunity to purchase the shares, maintaining their ownership stake and preserving control over the company's future. Under the North Dakota Right of First Refusal Clause, if a shareholder intends to sell or transfer their shares, they are required to first offer them to the existing shareholders at a fair market price or a predetermined price specified in the agreement. The existing shareholders then have the right to either accept or decline the offer within a specified time frame. If they choose to decline, only then can the shareholder proceed with the sale or transfer to a third party. There are two main types of North Dakota Right of First Refusal Clauses for Shareholders' Agreement: 1. Standard Right of First Refusal: This type gives existing shareholders the right to match the terms of the offer and purchase the shares on the same terms as the proposed third-party offer. If they choose not to exercise this right, the shareholder is free to proceed with the sale or transfer to the third party. 2. Enhanced Right of First Refusal: This type provides existing shareholders with an extra advantage by allowing them to have a right to purchase the shares on terms more favorable than those offered by the third party. If the existing shareholders are willing to match or exceed the third-party offer, they can supersede the third-party offer and acquire the shares under better terms. The North Dakota Right of First Refusal Clause serves as a valuable safeguard for shareholders' investments, ensuring that they have the ability to control who becomes a shareholder of the company. By employing this clause in a Shareholders' Agreement, companies can maintain stability, prevent unwanted ownership changes, and preserve the overall vision and direction of the business. It also protects minority shareholders from being overshadowed by larger shareholders or outside investors. In summary, the North Dakota Right of First Refusal Clause is a crucial legal provision granting existing shareholders the priority to purchase shares in the company before they can be sold to third parties. It promotes stability, preserves ownership control, and safeguards shareholders' interests.

The North Dakota Right of First Refusal Clause for Shareholders' Agreement is a crucial provision designed to protect shareholders' rights and ensure that they have the opportunity to purchase additional shares in the company before they can be sold or transferred to third parties. This clause grants existing shareholders the first opportunity to purchase the shares, maintaining their ownership stake and preserving control over the company's future. Under the North Dakota Right of First Refusal Clause, if a shareholder intends to sell or transfer their shares, they are required to first offer them to the existing shareholders at a fair market price or a predetermined price specified in the agreement. The existing shareholders then have the right to either accept or decline the offer within a specified time frame. If they choose to decline, only then can the shareholder proceed with the sale or transfer to a third party. There are two main types of North Dakota Right of First Refusal Clauses for Shareholders' Agreement: 1. Standard Right of First Refusal: This type gives existing shareholders the right to match the terms of the offer and purchase the shares on the same terms as the proposed third-party offer. If they choose not to exercise this right, the shareholder is free to proceed with the sale or transfer to the third party. 2. Enhanced Right of First Refusal: This type provides existing shareholders with an extra advantage by allowing them to have a right to purchase the shares on terms more favorable than those offered by the third party. If the existing shareholders are willing to match or exceed the third-party offer, they can supersede the third-party offer and acquire the shares under better terms. The North Dakota Right of First Refusal Clause serves as a valuable safeguard for shareholders' investments, ensuring that they have the ability to control who becomes a shareholder of the company. By employing this clause in a Shareholders' Agreement, companies can maintain stability, prevent unwanted ownership changes, and preserve the overall vision and direction of the business. It also protects minority shareholders from being overshadowed by larger shareholders or outside investors. In summary, the North Dakota Right of First Refusal Clause is a crucial legal provision granting existing shareholders the priority to purchase shares in the company before they can be sold to third parties. It promotes stability, preserves ownership control, and safeguards shareholders' interests.