# Change of Control Clause

Source: https://contracko.com/clause-library/change-of-control

# Change of Control Clause

Lets a party react (by consent, renegotiation or termination) if its counterparty is taken over.

## What it is

A change of control clause is triggered when ownership or control of a contracting party changes, for example by a takeover, merger, or sale of a majority stake. It gives the other party defined rights, such as consent, notification, renegotiation, or a right to terminate.

## Why it matters

You chose your counterparty for who they are; a takeover may put a competitor or a riskier owner behind the contract. A change of control clause protects against being bound to an unwanted new party, especially where assignment alone would not be triggered.

## How to apply it

- Define "control" precisely: voting rights, board control, or a percentage threshold.
- Choose the consequence: notice, prior consent, renegotiation, or termination.
- Carve out intra-group reorganisations that do not change ultimate control.
- Coordinate the clause with the assignment and confidentiality provisions.

## Sample wording

> If a person acquires control of a party (directly or indirectly holding more than fifty percent of its voting rights), the other party may terminate this agreement on thirty (30) days' written notice.

## Negotiation tips

- • The target should narrow "control" and exclude internal restructurings to avoid an unintended trigger.
- • The protected party should secure termination, not merely a duty to notify.

## Common pitfalls

- • Defining control too loosely, so an ordinary group reorganisation triggers the clause.
- • Relying on the assignment clause alone, which a share sale may not trigger.

### How Contracko helps

Contracko lets you run an instant portfolio search to find every agreement that contains a change-of-control clause, so you are never caught off-guard when a counterparty announces a deal. Its AI analysis extracts the control threshold, the consequence (notice, consent, or termination), and the exercise window, giving your M&A team the full picture without manual contract reviews.

## Legal references

- [BW 6:248 Reasonableness and fairness Dutch law](https://wetten.overheid.nl/BWBR0005289)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Financial Services](https://contracko.com/industries/financial-services)[Software & SaaS](https://contracko.com/industries/software-saas)[Manufacturing](https://contracko.com/industries/manufacturing)[Consulting](https://contracko.com/industries/consulting)[B2B SaaS Companies](https://contracko.com/industries/b2b-saas)

## Related clauses

- [Assignment Clause](https://contracko.com/clause-library/assignment)
- [Compliance Clause](https://contracko.com/clause-library/compliance)
- [Termination for Convenience Clause](https://contracko.com/clause-library/termination-for-convenience)
- [Confidentiality Clause](https://contracko.com/clause-library/confidentiality)

## Related terms

- [Assignment](https://contracko.com/glossary/assignment)
- [Material adverse change (MAC)](https://contracko.com/glossary/material-adverse-change)
- [Counterparty](https://contracko.com/glossary/counterparty)

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## Frequently asked questions

Common questions about this clause.

- **Q:** Why is a change of control clause needed if there is an assignment clause?
  **A:** A share sale changes who controls the company without transferring the contract, so an assignment clause alone may not be triggered.

- **Q:** Should intra-group reorganisations trigger the clause?
  **A:** Usually not. They are commonly carved out, since ultimate control and counterparty risk do not actually change.

- **Q:** What percentage threshold typically defines "control"?
  **A:** Most clauses use 50% of voting rights as the control threshold, though some sensitive contracts set it lower at 30% or 25% to catch earlier shifts in influence.

- **Q:** How long does a party have to exercise its rights after a change of control?
  **A:** Contracts typically allow 30 to 90 days from notice or actual knowledge of the change. Letting this window lapse without acting may be treated as acceptance of the new controller.

- **Q:** Does a change of control clause survive termination of the contract?
  **A:** No. Once the contract ends, the clause ends with it. Its relevance is during the term: protecting the party from being bound to an unwanted new counterparty for the remaining duration.

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