South Carolina 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 "Right of First Refusal" clause, also known as ROAR, is a significant provision in a Shareholders' Agreement in South Carolina, which grants the existing shareholders or the company itself the first opportunity to purchase the shares of a shareholder who wishes to sell them. This clause ensures that the existing shareholders have the right to acquire the shares, thereby maintaining control over the company and preventing outsiders from gaining significant influence. The South Carolina Right of First Refusal clause aims to safeguard the interests of shareholders by allowing them a chance to retain or increase their ownership stake in the company before shares are sold to third parties. This clause is essential for maintaining stability, protecting shareholders' investments, and preventing unwanted changes in the shareholder base. There are different types of South Carolina Right of First Refusal clauses commonly used in Shareholders' Agreements, each with its specific conditions and implications. Here are a few notable variations: 1. Unqualified Right of First Refusal: In this type of clause, when a shareholder decides to sell their shares, they must first offer them to the existing shareholders or the company before marketing them to third parties. The existing shareholders or the company then have the right to accept or decline the offer within a specified timeframe. 2. Qualified Right of First Refusal: This clause allows existing shareholders or the company to refuse the purchase of shares by matching the terms offered by a third-party buyer, including the purchase price, payment terms, and other conditions. The shareholder seeking to sell their shares may only sell them to the third party if the existing shareholders or the company declines to match the terms. 3. Right of First Offer: This type of clause requires the shareholder wanting to sell their shares to inform the existing shareholders or the company of their intent to sell. The existing shareholders or the company then have the option to make an offer to purchase the shares at a price and on terms determined by the shareholder. 4. Right of Co-Sale: This clause comes into effect when a significant shareholder intends to sell their shares to a third party. It grants the other shareholders the right to sell a proportionate number of their shares at the same price and under similar conditions as the selling shareholder. These variations in the South Carolina Right of First Refusal clause offer different levels of protection for shareholders and provide flexibility regarding the process of selling shares. It is crucial for shareholders to carefully consider and negotiate the specific terms of this clause when drafting a Shareholders' Agreement to ensure their interests are adequately protected.

A "Right of First Refusal" clause, also known as ROAR, is a significant provision in a Shareholders' Agreement in South Carolina, which grants the existing shareholders or the company itself the first opportunity to purchase the shares of a shareholder who wishes to sell them. This clause ensures that the existing shareholders have the right to acquire the shares, thereby maintaining control over the company and preventing outsiders from gaining significant influence. The South Carolina Right of First Refusal clause aims to safeguard the interests of shareholders by allowing them a chance to retain or increase their ownership stake in the company before shares are sold to third parties. This clause is essential for maintaining stability, protecting shareholders' investments, and preventing unwanted changes in the shareholder base. There are different types of South Carolina Right of First Refusal clauses commonly used in Shareholders' Agreements, each with its specific conditions and implications. Here are a few notable variations: 1. Unqualified Right of First Refusal: In this type of clause, when a shareholder decides to sell their shares, they must first offer them to the existing shareholders or the company before marketing them to third parties. The existing shareholders or the company then have the right to accept or decline the offer within a specified timeframe. 2. Qualified Right of First Refusal: This clause allows existing shareholders or the company to refuse the purchase of shares by matching the terms offered by a third-party buyer, including the purchase price, payment terms, and other conditions. The shareholder seeking to sell their shares may only sell them to the third party if the existing shareholders or the company declines to match the terms. 3. Right of First Offer: This type of clause requires the shareholder wanting to sell their shares to inform the existing shareholders or the company of their intent to sell. The existing shareholders or the company then have the option to make an offer to purchase the shares at a price and on terms determined by the shareholder. 4. Right of Co-Sale: This clause comes into effect when a significant shareholder intends to sell their shares to a third party. It grants the other shareholders the right to sell a proportionate number of their shares at the same price and under similar conditions as the selling shareholder. These variations in the South Carolina Right of First Refusal clause offer different levels of protection for shareholders and provide flexibility regarding the process of selling shares. It is crucial for shareholders to carefully consider and negotiate the specific terms of this clause when drafting a Shareholders' Agreement to ensure their interests are adequately protected.