Governance & rights
Co-sale right
Investor's right to sell their shares alongside a founder's sale to a third party.
Definition
A co-sale right is an investor's contractual right to sell a proportional amount of their own shares whenever a founder (or other major shareholder) sells shares to a third party. It's essentially a tag-along right specifically targeted at founder secondary sales — preventing founders from quietly selling out while investors are still locked in.
Same concept, different names
| Universal | Contractual; in shareholders / investor rights agreement |
|---|
Co-sale vs tag-along
Co-sale is functionally a tag-along right, but specifically scoped to founder/major shareholder transfers. Tag-along applies broadly to any majority shareholder transfer; co-sale is narrower — typically just founders or named individuals.
- Triggered when a founder sells more than a threshold (e.g., 5% of their position)
- Investors can sell a proportional amount of their own holdings, on the same terms
- Common in venture-backed companies where investors don't want to be left holding equity while the founder cashes out
Exceptions and carve-outs
Typical exceptions where co-sale doesn't apply:
- Transfers to family members or family trusts (estate planning)
- Transfers to entities controlled by the founder
- Transfers below a de minimis threshold (small block trades)
- Sales as part of an approved liquidity program (secondary tenders)
In Octelligence
Founder secondary sales, co-sale triggered automatically.
Octelligence flags co-sale rights and triggers the notification workflow when a founder initiates a secondary sale. Investors receive the offer to participate at the same price.
View digital corporate recordsCap table, registers, certificates
Track every investor right at the share level.
Pro-rata, ROFR, drag-along, MFN, registration rights. Recorded against the share, surfaced when relevant.