Iowa Code 490.627 – Restriction on transfer of shares
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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 voted in favor of the restriction.
Terms Used In Iowa Code 490.627
- Articles of incorporation: means the articles of incorporation described in section 490. See Iowa Code 490.140
- 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.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Person: means a person as defined in section 4. See Iowa Code 490.140
- Shareholder: means a record shareholder. See Iowa Code 490.140
- Shares: means the units into which the proprietary interests in a domestic or foreign corporation are divided. See Iowa Code 490.140
- state: when applied to the different parts of the United States, includes the District of Columbia and the territories, and the words "United States" may include the said district and territories. See Iowa Code 4.1
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 490.626, subsection 2. Unless so noted, or contained, 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 for any of the following purposes:
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. For any other reasonable purpose.
4. A restriction on the transfer or registration of transfer of shares may do any of the following:
a. Obligate the shareholder first to offer 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 the corporation, the holders of any class or series of its shares, or other persons to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable.
d. Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
5. As used in this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.