Shareholders agreement with drag along and tag along rights

A buyer wants all the shares, and drag-along and tag-along are the two provisions that make that possible without every shareholder agreeing on the day: drag-along lets a majority force the minority to sell on the same terms, tag-along lets the minority insist on being bought out when the majority sells. Each protects one side against the other, each needs the articles as well as the agreement to bind the shares, and each has details (the threshold, the price, the terms, a refusal to sign) that decide whether the sale completes. I draft the agreement, with a briefing session and a note on how it fits the articles, for a fixed fee of £995, delivered in five working days.

Who this is for

Shareholders in England and Wales who want a sale of the company to be possible on a majority decision and fair to the minority, including founders expecting investment and minority holders who want to be sure they are not left behind.

What matters in drag-along and tag-along rights

What drag-along does and the threshold that triggers it

Drag-along provides that where shareholders holding a stated percentage accept a bona fide offer from a third party for all the shares, the other shareholders must sell their shares to the buyer on the same terms, so that the buyer can acquire the whole company; the threshold (a bare majority, three quarters, or a majority including named shareholders) decides how easily a sale can be forced, and the agreement should set it by reference to the actual holdings, because a threshold the majority already exceeds is a right to sell the company whenever it likes and one it can never reach is no right at all.

The protections a dragged shareholder needs

A shareholder who can be forced to sell needs the agreement to require the same price per share for shares of the same class, the same form of consideration (cash, or shares in the buyer only if every seller receives them), no obligation to give warranties beyond title to their own shares and no greater liability than their proportion of the price, the dragging shareholders' obligation to disclose the terms in full, a minimum price or a valuation floor where the parties agree one, and a period within which the sale must complete or the drag lapses; a drag that lets the majority sell to its own associate at a low price is the abuse the protections prevent, and connected-party buyers should be excluded.

What tag-along does and when it applies

Tag-along provides that where shareholders holding a stated percentage (usually control, or any transfer by a majority holder) propose to sell to a third party, the buyer must offer to buy the other shareholders' shares on the same terms, so that the minority is not left as a minority under a new and unknown owner; the agreement should say whether it applies to any transfer of control or to any transfer at all, whether the tagging shareholders sell all their shares or a proportion, and how the offer is made and accepted within a stated period, with the transfer void if the buyer does not make the offer.

The mechanics of a sale with both rights

The agreement should set the process: the offer notified to all shareholders with its terms, a stated period for the majority to decide to drag or the minority to tag, the deemed acceptance mechanism, the completion mechanics (transfers, share certificates, the payment of each shareholder's share of the price), the treatment of options and loans, and the position where part of the price is deferred or contingent, with each shareholder sharing in it pro rata; a sale in which the dragged shareholders are paid last, or not at all until the earn-out, is a sale the provisions should have addressed.

The articles, the power of attorney and completion without every signature

A shareholder who ignores a drag notice cannot be compelled by the agreement alone without litigation, so the articles should contain the drag-along and the mechanism (transfer deemed executed, the company authorised to receive the price on trust, a director appointed as attorney to sign the transfer), binding every shareholder under section 33 of the Companies Act 2006, with the agreement granting a power of attorney as well; the note on the articles sets out the provisions needed, and amended articles are quoted separately. Transfers under the drag should also be exempt from the pre-emption rights that would otherwise apply.

The sale that falls between the rights

A sale of part of the shares that does not reach the drag threshold or trigger tag-along, a sale of the business and assets rather than the shares, a share exchange with a buyer's shares as consideration, and a sale to a connected party are the situations the two rights do not cover, and the agreement should address them: a sale of the business as a reserved matter with the proceeds distributed, pre-emption and a right of first refusal on partial transfers, and the exclusion of connected-party sales from the drag; the two rights are the frame, and the reserved matters are the rest of the picture.

What it costs

Shareholders agreement, £995. An agreement between the shareholders of a private company, with a note on how it interacts with your articles. Five working days.

Buying online forms the engagement on payment. The scope is what the shareholders agreement page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A briefing session with all shareholders together, to work through the questions people avoid asking each other
• A shareholders agreement drafted for your actual situation rather than a precedent with the names changed
• A note on how the agreement interacts with your articles, and whether the articles need amending to make it work
• A plain English explanation of every material choice, so nobody signs something they have not understood
• One round of amendments
• Signature-ready documents

What is not included

• Acting for individual shareholders separately, because I act for you jointly
• Company valuation
• Tax structuring, which needs your accountant and should run alongside this
• Amended articles of association and IP assignments, which I quote separately
• Filing at Companies House
• Resolving a dispute that has already started

Questions I am often asked

What drag-along threshold should we use?

One the majority can reach only with real support: often three quarters, or a majority including each founder, rather than a bare majority. The agreement tests the threshold against your actual holdings.

Can the majority drag me into a sale to the majority's own company?

Not if the agreement excludes connected-party buyers and requires a bona fide third-party offer, which it does. A floor price or valuation can be added as further protection.

A shareholder refuses to sign the transfer. Does the sale fail?

Not if the articles contain the drag mechanism and a director can sign as attorney, with the price held on trust for the refusing shareholder. Without the articles, the sale waits for a court order.

Related guidance and services

• Shareholders agreement, £995, the service this page describes
• Contract review, £495
• Employment contracts and handbooks, £595
• Shareholders agreement with pre-emption rights on share transfers
• Shareholders agreement for a company planning to sell within five years

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.