Shotgun clause,
Definition of Shotgun clause:
Most often, a shotgun clause is used to force a partner (or partners) into either buying out an offering partner or selling their shares to the offering partner. A shotgun clause may be written into a partnership's shareholder agreement and is sometimes referred to as a "buy-sell agreement.".
A shotgun clause is a special provision that may be used in a partnership to force a partner to sell their stake or buy out an offering partner. In effect, it is both a form of dispute resolution and a pricing mechanism.
Reciprocal provision in a shareholders agreement whereby a party which offers to buyout the other partys shares at a certain price must accept the other partys counter offer (proposed within a certain number of days) to buy its shares at the same price. Shotgun clause is typically included where two parties have equal (50-50) shareholding.
How to use Shotgun clause in a sentence?
- The shotgun clause attempts to provide security to the partners of a venture by ensuring that a fair price is offered.
- Most often, a shotgun clause is used to force a partner (or partners) into either buying out an offering partner or selling their shares to the offering partner.
- A shotgun clause may be written into a partnership's shareholder agreement and may be referred to as a "buy-sell agreement.".
- A shotgun clause is a special provision that may be used in a partnership to force a partner to sell their stake or buy out an offering partner.
Meaning of Shotgun clause & Shotgun clause Definition
