Utah 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. Utah Right of First Refusal Clause for Shareholders' Agreement: Explained A Right of First Refusal (ROAR) clause is a significant provision included in a Shareholders' Agreement that allows existing shareholders in a Utah corporation to maintain a level of control and protect their investments when new shares are issued or existing shares are sold. This article aims to provide a detailed description of the Utah Right of First Refusal Clause for Shareholders' Agreement, highlighting its importance, operation, and potential variations. In Utah, the Right of First Refusal Clause ensures that existing shareholders have the first opportunity to purchase any shares offered for sale by a shareholder who wishes to sell their stake in the corporation. This clause offers shareholders the exclusive right to match the terms and conditions of a third-party offer before it is accepted or the shares are sold to an outsider. By exercising this right, existing shareholders can maintain their proportional ownership in the corporation and influence its future direction. Types of Utah Right of First Refusal Clauses: 1. Standalone ROAR: This type of clause grants existing shareholders the opportunity to purchase shares before any external party is considered. Under this provision, if a shareholder proposes to sell their shares, they must first offer them to the existing shareholders at the same price and on the same terms. If the existing shareholders decline the offer, the shareholder is then free to sell to a third party. 2. Co-Sale or Tag Along ROAR: This clause protects minority shareholders by allowing them to join any potential sale of shares by a majority shareholder. It ensures that minority shareholders have the opportunity to sell their shares alongside the majority shareholder, under the same terms and conditions. 3. Weighted ROAR: This variation of the ROAR clause takes into account each shareholder's proportional ownership within the corporation. The right to purchase shares is based on the percentage of ownership held by each shareholder. For example, if a shareholder owns 25% of the corporation, they have the right to purchase 25% of the shares being offered for sale. 4. First N Offer ROAR: This clause limits the Right of First Refusal to a specific number of existing shareholders or a predetermined group. It enables certain shareholders to exercise their ROAR rights, while others may be excluded. The Utah Right of First Refusal Clause for Shareholders' Agreement is a powerful tool that safeguards shareholders' interests and allows them to protect the stability and control of the corporation. By understanding the various types of clauses and their implications, shareholders can negotiate terms that align with their objectives and goals. It is crucial for anyone involved in shareholder agreements to consult legal professionals who specialize in Utah corporate law to ensure compliance and effective implementation of the Right of First Refusal Clause.

Utah Right of First Refusal Clause for Shareholders' Agreement: Explained A Right of First Refusal (ROAR) clause is a significant provision included in a Shareholders' Agreement that allows existing shareholders in a Utah corporation to maintain a level of control and protect their investments when new shares are issued or existing shares are sold. This article aims to provide a detailed description of the Utah Right of First Refusal Clause for Shareholders' Agreement, highlighting its importance, operation, and potential variations. In Utah, the Right of First Refusal Clause ensures that existing shareholders have the first opportunity to purchase any shares offered for sale by a shareholder who wishes to sell their stake in the corporation. This clause offers shareholders the exclusive right to match the terms and conditions of a third-party offer before it is accepted or the shares are sold to an outsider. By exercising this right, existing shareholders can maintain their proportional ownership in the corporation and influence its future direction. Types of Utah Right of First Refusal Clauses: 1. Standalone ROAR: This type of clause grants existing shareholders the opportunity to purchase shares before any external party is considered. Under this provision, if a shareholder proposes to sell their shares, they must first offer them to the existing shareholders at the same price and on the same terms. If the existing shareholders decline the offer, the shareholder is then free to sell to a third party. 2. Co-Sale or Tag Along ROAR: This clause protects minority shareholders by allowing them to join any potential sale of shares by a majority shareholder. It ensures that minority shareholders have the opportunity to sell their shares alongside the majority shareholder, under the same terms and conditions. 3. Weighted ROAR: This variation of the ROAR clause takes into account each shareholder's proportional ownership within the corporation. The right to purchase shares is based on the percentage of ownership held by each shareholder. For example, if a shareholder owns 25% of the corporation, they have the right to purchase 25% of the shares being offered for sale. 4. First N Offer ROAR: This clause limits the Right of First Refusal to a specific number of existing shareholders or a predetermined group. It enables certain shareholders to exercise their ROAR rights, while others may be excluded. The Utah Right of First Refusal Clause for Shareholders' Agreement is a powerful tool that safeguards shareholders' interests and allows them to protect the stability and control of the corporation. By understanding the various types of clauses and their implications, shareholders can negotiate terms that align with their objectives and goals. It is crucial for anyone involved in shareholder agreements to consult legal professionals who specialize in Utah corporate law to ensure compliance and effective implementation of the Right of First Refusal Clause.