§ 7-106-208 — Restriction on transfer of shares and other securities

Colorado § 7-106-208

• Jurisdiction: Colorado
• Title 07: Corporations
• Art.: Shares and Distributions

Text

(1) The
articles of incorporation, the bylaws, an agreement among shareholders, or an
agreement among 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 became effective unless the holder
of such shares acquired such shares with knowledge of the restriction, is a party to
the agreement containing the restriction, or voted in favor of the restriction or
otherwise consented to 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
section 7-106-207 (2). Unless so 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 entitlements, benefits, or exemptions under federal, state, or
local laws; and

(c) 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 to the corporation or other persons,
separately, consecutively, or simultaneously, an opportunity to acquire the
restricted shares;

(b) Obligate the corporation or other persons, separately, consecutively, or
simultaneously, to acquire the restricted shares;

(c) Require, as a condition to such a transfer or registration, that any one or
more persons, including the corporation or the holders of any of its shares, approve
the transfer or registration, if the requirement is not manifestly unreasonable; or

(d) Prohibit the transfer or the registration of a 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.

Legislative History

Source: L. 93: Entire article added, p. 759, � 1, effective July 1, 1994.