Dragalongrätt

Dragalongrätt is a legal concept primarily found in corporate law, referring to the right of a majority shareholder to compel minority shareholders to sell their shares in a company under specific circumstances. This mechanism is designed to facilitate the sale of a company by allowing a buyer to acquire 100% of the shares, thereby avoiding the complexities of dealing with multiple small shareholders. The term "dragalong" implies that the minority shareholders are "dragged along" with the majority's decision to sell.

The implementation and conditions of dragalong rights vary by jurisdiction and are often stipulated in a company's articles of association or a shareholders' agreement. Typically, a dragalong right is triggered when a bona fide offer is received from a third party to acquire a significant portion, often a majority, of the company's shares. The terms of the sale, including the price per share, must generally be the same for all shareholders, protecting the minority from being offered a less favorable deal.

Dragalong rights serve to provide liquidity for majority shareholders and to prevent situations where a small number of dissenting minority shareholders can block a beneficial sale of the entire company. However, they are also subject to scrutiny to ensure they are not used oppressively against minority interests. Courts may review dragalong sales to confirm that the process was fair and that the minority shareholders received equitable treatment. The existence and enforceability of dragalong rights are crucial considerations for investors when entering into a business venture, particularly in private companies.