Arizona Laws 10-627. Restriction on transfer of shares and other securities; definition
A. The articles of incorporation, the bylaws, an agreement among shareholders or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.
Terms Used In Arizona Laws 10-627
- Articles of incorporation: means the original or restated articles of incorporation or articles of merger and all amendments to the articles of incorporation or merger and includes amended and restated articles of incorporation and articles of amendment and merger. See Arizona Laws 10-140
- Bylaws: means the code of rules adopted for the regulation or management of the affairs of the corporation irrespective of the name by which those rules are designated. See Arizona Laws 10-140
- Class: refers to a group of memberships that have the same rights with respect to voting, dissolution, redemption and transfer. See Arizona Laws 10-3140
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Dependent: A person dependent for support upon another.
- Person: includes an individual and entity. See Arizona Laws 10-140
- Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Arizona Laws 10-140
- Shares: means the units into which the proprietary interests in a corporation are divided. See Arizona Laws 10-140
B. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and if its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by section 10-626, subsection B. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.
C. A restriction on the transfer or registration of transfer of shares is authorized:
1. To maintain the corporation’s status if it is dependent on the number or identity of its shareholders.
2. To preserve exemptions under federal or state securities law.
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 the restricted shares.
2. Obligate or permit the corporation or other persons separately, consecutively or simultaneously to acquire the restricted shares.
3. Require the corporation, the holders of any class of its shares or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable.
4. Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
5. Impose any other restriction on transfer or registration that is not manifestly unreasonable.
E. For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.