Tag-along rights and drag-along rights are legal provisions that govern the rights and obligations of shareholders or investors in certain situations, particularly when a significant ownership stake in a company is being sold or transferred. Here's an explanation of the differences between tag-along rights and drag-along rights:
Tag-along rights: Tag-along rights, also known as co-sale rights, provide minority shareholders with the right to join in the sale of a company's shares when a majority shareholder or a controlling group intends to sell their stake. If a majority shareholder receives an offer to sell their shares, tag-along rights allow minority shareholders to "tag along" and sell their shares on the same terms and conditions as the majority shareholder. This provision is designed to protect minority shareholders and ensure that they have the opportunity to sell their shares at the same price and under the same terms as the majority shareholder.
