The Virginia Right of First Refusal Clause is an essential provision frequently included in shareholders' agreements to protect the rights of shareholders when it comes to selling or transferring their shares in a Virginia corporation. This clause grants existing shareholders the opportunity to purchase shares being sold or transferred by another shareholder before they are offered to external parties. By exercising the right of first refusal, shareholders have the chance to maintain the control and ownership structure of the corporation. There are two primary types of Virginia Right of First Refusal clauses that can be incorporated into a shareholders' agreement: 1. Absolute Right of First Refusal: This type of clause provides existing shareholders with an absolute right to purchase shares being offered for sale or transfer. When a shareholder decides to sell or transfer their shares, they are required to notify the corporation and provide details of the proposed transaction. The existing shareholders then have the first opportunity to match the terms of the proposed transaction and acquire the shares. 2. Right of First Refusal with Exceptions: This variation of the clause allows existing shareholders to exercise their right of first refusal, but also permits certain exceptions. For example, the shareholder seeking to sell or transfer their shares may be allowed to bypass the right of first refusal if the proposed buyer is an affiliate or family member. Additionally, a designated percentage of shares may be excluded from the right of first refusal, providing some flexibility for shareholders to distribute their shares without invoking the clause. It is important to note that the Virginia Right of First Refusal Clause provides a mechanism for existing shareholders to preserve the integrity and control of the corporation by allowing them to maintain a say in who becomes a shareholder. This clause is intended to safeguard shareholders' interests and maintain the overall stability of the corporation by preventing unwanted or unknown shareholders from acquiring significant ownership stakes. Overall, the Virginia Right of First Refusal Clause is a valuable provision in shareholders' agreements, helping maintain the stability and control of Virginia corporations while also protecting the interests of existing shareholders.
Virginia Right of First Refusal Clause for Shareholders' Agreement
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FAQ
When some of the shareholders wish to sell their share, a clause in the shareholder's agreement should state that the shareholders who wish to sell their shares have to show the right to match an offer received from a third party. This is known as the right of first refusal.
Right of first refusal (ROFR), also known as first right of refusal, is a contractual right to enter into a business transaction with a person or company before anyone else can. If the party with this right declines to enter into a transaction, the obligor is free to entertain other offers.
When you have a first right of refusal the seller must contact you and let you potentially move forward with a purchase before an offer can be accepted from another party. The first right of refusal can be put together either before a home is listed for sale or during the time it is on the market.
The right of first refusal is usually triggered when a third party offers to buy or lease the property owner's asset. Before the property owner accepts this offer, the property holder (the person with the right of first refusal) must be allowed to buy or lease the asset under the same terms offered by the third party.
A right of first refusal is a fairly common clause in some business contracts that essentially gives a party the first crack at making an offer on a particular transaction. In real estate terms, the phrase right of first refusal operates similarly.
A right of first refusal is a fairly common clause in some business contracts that essentially gives a party the first crack at making an offer on a particular transaction.
A right of first refusal, different from a right of first offer, gives the right holder the option to match an offer already received by the seller. A right of first offer is said to favor the seller, while a right of first refusal favors the buyer.
The right of first refusal is usually triggered when a third party offers to buy or lease the property owner's asset. Before the property owner accepts this offer, the property holder (the person with the right of first refusal) must be allowed to buy or lease the asset under the same terms offered by the third party.
A "right of first refusal" is a contractual right on the part of a potential buyer to purchase real property within a specified period of time after another potential purchaser submits a purchase offer.
Rights of first refusal clauses are similar to options contracts as the holder has the right, but not the obligation, to enter into a transaction that generally involves an asset. The person with this right has the opportunity to establish a contract or an agreement on an asset before others can.
