Providing more flexibility to entities entering into mergers and acquisition (M&A) deals, the Securities and Exchange Board of India (SEBI), on Thursday, allowed them to include preferential clauses such as “right of first refusal, tag-along and drag-along” in their share purchase agreements. Right of refusal gives one of the parties in an M&A deal the first option to buyout its partner in the event of the latter wishing to exit from the agreement at a later stage. Tag-along and drag-along clauses allow one of the partners to join the other party in cases like further acquisition or sell out deals.

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