Article · 10 min read

ROFR vs ROFO: A founder's guide to share transfer rights

Qapita Free Intermediate India

This is the exact mechanism that stops a co-founder selling to a stranger, explained by an India and SEA cap-table platform that drafts these clauses daily. It gives you sample SHA language for both ROFR and ROFO, and argues you should push for ROFO (offer to insiders first, before any outside bid) for tighter control over who lands on your register.

  • ROFR forces a selling founder to first offer shares to the company and other founders on the same terms an outsider agreed, ROFO forces the offer to insiders before any third party is even approached
  • The page hands you ready-to-adapt SHA clause text with bracketed placeholders for thresholds and acceptance windows, so your lawyer edits rather than drafts from scratch
  • Carve out permitted transfers (family, holding company, estate planning) so routine moves do not trip the restriction while genuine outsider sales stay blocked
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The question it answers

  1. What transfer restrictions should we put on founder shares so one co-founder cannot sell their stake to a random outsider?

Read with it

  1. ROFR alone does not finish the job: you still need tag-along so a minority founder is not stranded when the majority exits, and... Qapita Article · 9 min read Transfer of Share Rights: Tag-Along and Drag-Along Explained Qapita
  2. This puts the transfer restrictions in their real home: the Indian SHA, alongside the lock-in, board consent and... IncorpX Article · 15 min read Shareholders' Agreement for Startups in India: Key Clauses You Must Include IncorpX
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