35-1-628. Restriction on transfer or registration of transfer of shares and other securities. (1) 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 have voted in favor of the restriction.
     (2) 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 its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by 35-1-627. Unless noted, a restriction is not enforceable against a person without knowledge of the restriction.
     (3) A restriction on the transfer or registration of transfer of shares is authorized:
     (a) to maintain the corporation's status when it is dependent on the number or identity of its shareholders;
     (b) to preserve exemptions under federal or state securities law;
     (c) to preserve an election under the Internal Revenue Code; or
     (d) for any other reasonable purpose.
     (4) A restriction on the transfer or registration of transfer of shares may:
     (a) obligate the shareholder first to offer the corporation or other person, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares;
     (b) obligate the corporation or other person, separately, consecutively, or simultaneously, to acquire the restricted shares;
     (c) 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; or
     (d) prohibit the transfer of the restricted shares to designated persons or classes of persons if the prohibition is not manifestly unreasonable.
     (5) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.

     History: En. Sec. 44, Ch. 368, L. 1991.