A North Carolina Legend on a Stock Certificate with Reference to a Separate Document Restricting Transfer of Shares is a legal provision that exists to restrict and regulate the transfer of company shares in North Carolina. This legend is added to stock certificates issued by corporations, indicating the presence of specific provisions outlined in a separate document known as the "Restricting Transfer of Shares Agreement." The purpose of this legend is to inform shareholders, potential buyers, and other parties that the transfer of these shares is subject to certain limitations and conditions established in the governing agreement. These restrictions may include limitations on share transfers to specific individuals or entities, requirements for shareholder approval before transferring shares, or provisions restricting the transfer of shares outside established periods or events. By including the North Carolina Legend on a Stock Certificate, the corporation is ensuring that any potential transferee is aware of and bound by the restrictions outlined in the separate document. It serves as a protective measure for the corporation, shareholders, and other stakeholders, preventing unauthorized or unsuitable transfers of shares. Different types of North Carolina Legends on Stock Certificates with Reference to Separate Document Restricting Transfer of Shares may include: 1. Standard Transfer Restriction Legend: This type of legend is commonly used by corporations to indicate that the transfer of shares is subject to specific restrictions outlined in the separate Restricting Transfer of Shares Agreement. It acts as a general notice to potential transferees of the existence and importance of the agreement. 2. Approval Requirement Legend: This legend indicates that the transfer of shares can only occur upon obtaining approval from the corporation's board of directors or shareholders. It ensures that any transfer is subject to a thorough evaluation process and aligns with the company's strategic goals or vision. 3. Time-based Restriction Legend: This type of legend restricts the transfer of shares for a specific period or until certain events occur. For instance, it may stipulate that shares cannot be transferred until a certain amount of time has passed since their initial issuance or until the company achieves certain financial milestones. 4. Qualified Investor Legend: This legend is utilized when the corporation wants to limit share transfers to specific individuals or entities that meet predetermined criteria, such as being accredited investors or professional investors. It ensures that shares remain within the hands of sophisticated and knowledgeable investors. It is crucial for shareholders, potential buyers, and third parties dealing with North Carolina corporations to carefully review these legends and the associated Restricting Transfer of Shares Agreement before engaging in any share transfer transactions. Understanding the limitations and conditions imposed by these legends is vital to ensure compliance with North Carolina laws and protect the interests of all parties involved in the share transfer process.
North Carolina Legend on Stock Certificate with Reference to Separate Document Restricting Transfer of Shares
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Restricted stock refers to unregistered shares of ownership in a corporation that are issued to corporate affiliates, such as executives and directors. Restricted stock is non-transferable and must be traded in compliance with special Securities and Exchange Commission (SEC) regulations.
In order to have the legend on a stock certificate removed, investors should contact the company's shareholder relations department to find out the details of the removal process. Following that, the company will send a confirmation authorizing its transfer agent to remove the legend.
In general, restricted securities are acquired in a nonpublic transaction (private placement). Such securities are unregistered, can only be resold under certain conditions and usually bear a legend to that effect.
Only a transfer agent can complete the task of removing a restrictive stock legend. The transfer agent will require an opinion letter from the issuer's counsel or from his or her own lawyer plus 144 papers completed by a broker?stating that the restricted legend can be removed.
The purpose of the restrictive legend or notation is to protect the issuing company from loosing its private placement exemption for the initial sale of the securities and to notify the investor that the restricted securities cannot be resold into the public securities market without satisfying certain requirements.
