Texas Business Organizations Code

§ 21.213 — ENFORCEABILITY OF RESTRICTION ON TRANSFER OF CERTAIN SECURITIES

BO § 21.213Title 2. CORPORATIONS · Ch. 21. FOR-PROFIT CORPORATIONS · Art. E. SHAREHOLDER RIGHTS AND RESTRICTIONS

Statute text

(a)A restriction placed on the transfer or registration of the transfer of a security of a corporation is specifically enforceable against the holder, or a successor or transferee of the holder, if:

(1)the restriction is reasonable and noted conspicuously on the certificate or other instrument representing the security; or

(2)with respect to an uncertificated security, the restriction is reasonable and a notation of the restriction is contained in the notice sent with respect to the security under Section 3.205.

(b)Unless noted in the manner specified by Subsection (a) with respect to a certificate or other instrument or an uncertificated security, an otherwise enforceable restriction is ineffective against a transferee for value without actual knowledge of the restriction at the time of the transfer or against a subsequent transferee, regardless of whether the transfer is for value. A restriction is specifically enforceable against a person other than a transferee for value from the time the person acquires actual knowledge of the restriction's existence.

Legislative history

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.