Texas Business Organizations Code

§ 21.211 — VALID RESTRICTIONS ON TRANSFER

BO § 21.211Title 2. CORPORATIONS · Ch. 21. FOR-PROFIT CORPORATIONS · Art. E. SHAREHOLDER RIGHTS AND RESTRICTIONS

Statute text

(a)Without limiting the general powers granted by Sections 21.210 and 21.213 to impose and enforce reasonable restrictions, a restriction placed on the transfer or registration of transfer of a security of a corporation is valid if the restriction reasonably:

(1)obligates the holder of the restricted security to offer a person, including the corporation or other holders of securities of the corporation, an opportunity to acquire the restricted security within a reasonable time before the transfer;

(2)obligates the corporation, to the extent provided by this code, or another person to purchase securities that are the subject of an agreement relating to the purchase and sale of the restricted security;

(3)requires the corporation or the holders of a class of the corporation's securities to consent to a proposed transfer of the restricted security or to approve the proposed transferee of the restricted security for the purpose of preventing a violation of law;

(4)prohibits the transfer of the restricted security to a designated person or group of persons and the designation is not manifestly unreasonable;

(5)maintains the status of the corporation as an electing small business corporation under Subchapter S of the Internal Revenue Code;

…

Legislative history

Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 49, eff. January 1, 2006. Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737), Sec. 71, eff. September 1, 2007.