Tag-along rights (also called co-sale rights) are contractual provisions that allow minority shareholders to participate in any sale of shares by a majority or controlling shareholder, on the same terms and pro-rata to their shareholding. The right is the structural counterpart to drag-along: where drag-along protects buyers from minority holdouts, tag-along protects minority shareholders from being left behind when founders or majority investors exit their positions. Tag-along is standard in venture-backed cap tables and typically appears in the Right of First Refusal & Co-Sale Agreement.
The mechanic: when a founder or majority shareholder proposes to sell shares to a third party, they must first notify all tag-eligible shareholders of the proposed terms (price, buyer identity, conditions). Tag-eligible holders then have a window (typically 15–30 days) to elect to participate, selling their pro-rata share at the same per-share price. The selling shareholder is then required to either accept the reduced primary allocation or abandon the sale. The buyer must accept the full bundle or no shares.
Tag-along structures vary in scope: preferred-only tag (preferred investors can tag on founder secondary sales — protects investors from founder cash-out without their participation); common-only tag (rare in VC; common shareholders can tag on preferred sales); and mutual tag (both preferred and common can tag on the other’s sales — uncommon in VC due to preferred-investor liquidity preferences). The most common configuration: preferred-only tag on founder transfers, with founders carve-outs for de minimis sales (e.g., up to $1M annually), estate planning, and qualified transfers to family entities.
Tag-along rights interact significantly with Right of First Refusal (ROFR) provisions. ROFR gives the company (and sometimes investors) the first right to purchase the shares before the third-party buyer; if ROFR is not exercised, tag-along then activates allowing co-sale. The ordering matters: typically the company’s ROFR runs first, then investor ROFR, then tag-along — collectively forming a comprehensive transfer-restriction regime.
For Turkish founders structuring international VC rounds, tag-along provisions in the U.S. Voting/Co-Sale Agreement interact with parallel transfer-restriction provisions in the Turkish operating-company Articles of Association. Vircon Legal advises founders and investors on tag-along structuring — scope definition (preferred-only vs. mutual), founder carve-out negotiation (annual liquidity windows, estate planning exemptions), pro-rata calculation methodology, coordination with ROFR ordering, and the alignment of U.S. holding-company tag mechanics with Turkish subsidiary transfer restrictions.