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Tag-along rights in publicly traded companies

Personal Finance & Money Asked by CentaurWarchief on October 5, 2020

I have a couple of questions:

First-off: in Brazil, we have listing segments for companies that are publicly traded. It’s basically a set of rules that those companies have to comply with. So for instance, if you’re listed in "Novo Mercado", your Free Float must be above 25%. You also need to offer 100% of tag-along rights. Do we have something similar in the US?

Also, speaking of tag-along rights — how does that work and where can I find the % for companies traded at NYSE/NASDAQ? So say the majority shareholders of Apple are selling their positions, hence, changing the company’s ownership. I don’t like the new owner(s) and want to sell the stocks that I own from Apple at the same price the majors are selling. Or, in case they close capital, will there be an agreement on the price for the minority shareholders? In Brazil, the tag-along rights plays a role on this. It’s going to dictate your rights in terms of price.

Also, I am looking for the actual Free Float of those companies. Based on some research that I’ve made, the closest that I got is: number of shares minus closely held shares. So for Apple, what I have is:

Number of Shares Outstanding = 4.519.180.000
Closely held shares = 6.435.313
Free float = 4.512.744.687

One Answer

Investopedia Tag Along

I did a bit of research on tag along rights. They are not required, but often accompany venture capital deals (more used when the company is private).

In the U.S., as a hypothetical example, let's say Apple is being bought out and taken private. In that case, all public shareholders would be required to sell their stake at the agreed upon price. Shareholders have an opportunity to vote to approve or deny the transaction. If they believe the agreed price is too low, minority shareholders can, and often do, sue to stop the transaction or try to raise the price.

Answered by tuxtuxtux on October 5, 2020

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