2006 Code of Virginia § 13.1-649 - Restriction on transfer of shares and other securities

13.1-649. Restriction on transfer of shares and other securities.

A. The articles of incorporation, bylaws, an agreement among shareholders, oran agreement between shareholders and the corporation may impose restrictionson the transfer or registration of transfer of shares of the corporation. Arestriction does not affect shares issued before the restriction was adoptedunless the holders of the shares are parties to the restriction agreement orvoted in favor of the restriction.

B. A restriction on the transfer or registration of transfer of shares isvalid and enforceable against the holder or a transferee of the holder if therestriction is authorized by this section and its existence is notedconspicuously on the front or back of the certificate or is contained in theinformation statement required by subsection B of 13.1-648. Unless sonoted, a restriction is not enforceable against a person without knowledge ofthe restriction.

C. A restriction on the transfer or registration of transfer of shares isauthorized:

1. To maintain the corporation's status when it is dependent on the number oridentity of its shareholders;

2. To preserve exemptions under federal or state securities law; and

3. For any other reasonable purpose.

D. A restriction on the transfer or registration of transfer of shares may:

1. Obligate the shareholder first to offer the corporation or other persons(separately, consecutively, or simultaneously) an opportunity to acquire therestricted shares;

2. Obligate the corporation or other persons (separately, consecutively, orsimultaneously) to acquire the restricted shares;

3. Require the corporation, the holders of any class of its shares, oranother person to approve the transfer of the restricted shares, if therequirement is not manifestly unreasonable; or

4. Prohibit the transfer of the restricted shares to designated persons orclasses of persons, if the prohibition is not manifestly unreasonable.

E. For purposes of this section, "shares" includes any warrants, rights oroptions to acquire any such shares or any security or other obligation of thecorporation convertible into any such shares or into warrants, rights oroptions to acquire any such shares.

(1985, c. 522; 2005, c. 765.)