An Analysis of Shareholder Agreements

Alexander Ljungqvist (), Gilles Chemla and Michel Habib

No 3457, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Shareholder agreements govern the relations among shareholders in privately-held companies, such as joint ventures or venture capital-backed ?rms. We provide an explanation for the use of put and call options, pre-emption rights, drag-along rights, demand rights, tag-along rights, and catch-up clauses in shareholder agreements. We view these clauses as serving to preserve the parties? incentives to make ex ante investments when ex post renegotiation may alter the parties? shares of the payoff. We extend our framework to discuss the use of other clauses, such as the option to extend the life of a business alliance.

Keywords: Shareholder agreements; Put options; Call options; Pre-emption rights; Drag-along rights; Demand rights; Tag-along rights; Catch-up clauses (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2002-07
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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