THE SHS options give a shareholder the right, but not the obligation to resell its shares to the company (or other shareholders) at a time or at one or more events determined at a specified price or price determined by a predetermined formula. Investors who want to leave a business prematurely because it does not get certain income on a given date often need a put option. A put option may stipulate that a shareholder may resell all or part of his shares to the company (or other shareholders). With respect to put options, the remaining entity or shareholders may not be able to afford to buy back the shareholder who is conducting the sale. One way to mitigate this problem, if there is to be a put option, is to determine that payments can be made in increments, and until full payment, the sale shares are held in trust. In this case, it would be important to specify who will have linked the voting rights to Treuhand`s shares. A pellet gun clause requires a shareholder to sell his share or buy a shareholder in the offer. It is a mandatory buy-and-sell mechanism between shareholders, triggered when a shareholder makes an offer to buy or sell all of its shares to another shareholder. When a shareholder makes an offer to buy the shares of another shareholder, the shareholder receiving the offer must either sell 1) its shares at the offered price or 2) buy the shares of the shareholder who made the offer at the same price and on the same terms. Anti-dilution clauses are generally related to raising capital or issuing additional shares.
Dilution is simply a reduction in participation that can be either a dilution of value (economic dilution) or relative property (percentage dilution). The anti-dilution provisions give an investor the right to maintain proportionate ownership in a company by allowing him to purchase a proportional number of shares of each future issue of the company`s shares at fixed or adjusted prices. The shareholders` pact aims to ensure the fair treatment of shareholders and the protection of their rights. A merger or takeover usually triggers a drag-along right, as buyers generally seek full control of a business. Drag-along rights help eliminate minority owners and allow the sale of 100% of a company`s securities to a potential acquirer.
