Basic aspects of drag along and tag along rights

Abstract

The paper analyses the rights of members of closed companies originating from common law - drag along and tag along rights. Since they represent effective instrument of prevention of second agency problem of corporate governance, relating to the conflict of interest between majority and minority shareholder, as well as for resolving conflicts between members that may occur in case of the sale of a company's share, these rights were introduced in civil law countries as well. In recent years, drag along and tag along rights have become more significant in domestic practice, since they are often contracted between members of domestic companies. For this reason, it is important to understand the purpose of these rights and the interests that are protected by them. Therefore, the aim of this paper is to explain the concept and purpose of drag along and tag along rights.