What are Resale Rights?
The co-sale right means that when other shareholders, especially the initial shareholders, want to transfer or sell the shares, PE has the right to transfer the shares to the third party together with the initial shareholders at the selling price of the initial shareholders according to the capital contribution ratio.
Joint sale right
Right!
- Chinese name
- Joint sale right
- Object
- shareholder
- Acting on
- When selling stock
- Function
- Restrict target company initial shareholders and PE
- The co-sale right means that when other shareholders, especially the initial shareholders, want to transfer or sell the shares, PE has the right to transfer the shares to the third party together with the initial shareholders at the selling price of the initial shareholders according to the capital contribution ratio.
- The co-sale right means that when other shareholders, especially the initial shareholders, want to transfer or sell the shares, PE has the right to transfer the shares to the third party together with the initial shareholders at the selling price of the initial shareholders according to the capital contribution ratio.
- The reason why PE has such a demand is that when the initial shareholders want to "retreat", they also have the opportunity to "retreat" with the initial shareholders. It should be said that the joint sale right is binding on the initial shareholders of the target enterprise and the PE [1] . Under the Chinese legal framework, unless explicitly prohibited by the Company Law, any agreement made between company shareholders, including the right to co-sell, is not subject to law. However, such agreements can only be binding between the shareholders of the company, not the third party, and the right of joint sale involves exactly the third party. That is, a third party who wants to acquire the initial shareholder. Therefore, in the design of the joint selling right clause, it can be agreed that the initial shareholders must transfer the shares with the consent of the PE, otherwise the shares cannot be obtained. This is used as the bargaining chip, and the initial shareholders are required to coordinate to bring PE into the transaction.