Right of First Refusal (ROFR)

Right of First Refusal is a contractual right often included in shareholder agreements. It allows existing investors or stakeholders to purchase shares before they are offered to outside buyers. This helps maintain ownership structure and prevents unwanted third parties from entering. ROFR is commonly used in startup financing rounds and secondary sales. While it protects existing investors, it can also slow down transactions because approvals must be obtained before completing a sale.