New Jersey 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 New Jersey Right of First Refusal Clause for Shareholders' Agreement is an essential provision included in corporate agreements to protect the interests of shareholders and maintain control over ownership transfers. This clause ensures that existing shareholders have the opportunity to purchase the shares of a shareholder who wishes to sell before the shares can be sold to a third party. Under New Jersey corporate law, the right of first refusal clause can be categorized into two types: 1. Standard Right of First Refusal: This type of clause grants existing shareholders the right to match any bona fide offer made by a potential third-party buyer for the shares of a selling shareholder. If a shareholder intends to sell their shares, they must provide notice to the existing shareholders, who then have a specified period to decide whether they wish to exercise their right to purchase the shares at the offered price. If they decline, the selling shareholder can proceed with the sale to the third party. 2. Right of First Offer: This variation of the clause allows existing shareholders to have the first opportunity to purchase the shares before the selling shareholder seeks outside buyers. In this case, the selling shareholder is required to approach the existing shareholders and present them with a proposed sale price and terms. If any shareholder agrees to purchase the shares on these terms, the sale can proceed, but if all shareholders decline, the selling shareholder can then pursue other potential buyers. The purpose of these clauses is to maintain the stability and control of the company by giving shareholders the chance to maintain their ownership stake before any shares are sold to outsiders. By utilizing the New Jersey Right of First Refusal Clause, shareholders can exercise their preemptive rights, safeguard their investment, and ensure ongoing participation in key decision-making processes within the company. In summary, the New Jersey Right of First Refusal Clause for Shareholders' Agreement is an important provision that grants existing shareholders the opportunity to purchase shares before they are sold to third parties. It can be implemented in two main forms: the standard right of first refusal and the right of first offer. These clauses play a crucial role in preserving the control and stability of a company, allowing shareholders to maintain their ownership stake and secure their investment.

The New Jersey Right of First Refusal Clause for Shareholders' Agreement is an essential provision included in corporate agreements to protect the interests of shareholders and maintain control over ownership transfers. This clause ensures that existing shareholders have the opportunity to purchase the shares of a shareholder who wishes to sell before the shares can be sold to a third party. Under New Jersey corporate law, the right of first refusal clause can be categorized into two types: 1. Standard Right of First Refusal: This type of clause grants existing shareholders the right to match any bona fide offer made by a potential third-party buyer for the shares of a selling shareholder. If a shareholder intends to sell their shares, they must provide notice to the existing shareholders, who then have a specified period to decide whether they wish to exercise their right to purchase the shares at the offered price. If they decline, the selling shareholder can proceed with the sale to the third party. 2. Right of First Offer: This variation of the clause allows existing shareholders to have the first opportunity to purchase the shares before the selling shareholder seeks outside buyers. In this case, the selling shareholder is required to approach the existing shareholders and present them with a proposed sale price and terms. If any shareholder agrees to purchase the shares on these terms, the sale can proceed, but if all shareholders decline, the selling shareholder can then pursue other potential buyers. The purpose of these clauses is to maintain the stability and control of the company by giving shareholders the chance to maintain their ownership stake before any shares are sold to outsiders. By utilizing the New Jersey Right of First Refusal Clause, shareholders can exercise their preemptive rights, safeguard their investment, and ensure ongoing participation in key decision-making processes within the company. In summary, the New Jersey Right of First Refusal Clause for Shareholders' Agreement is an important provision that grants existing shareholders the opportunity to purchase shares before they are sold to third parties. It can be implemented in two main forms: the standard right of first refusal and the right of first offer. These clauses play a crucial role in preserving the control and stability of a company, allowing shareholders to maintain their ownership stake and secure their investment.