The North Dakota Legend on Stock Certificate with Reference to Separate Document Restricting Transfer of Shares is a legal provision used in the state of North Dakota to restrict the transfer of shares in a company. This legend refers to an accompanying separate document that outlines specific conditions and limitations on the transfer of the shares. It serves to protect the interests and rights of the company and its shareholders. There are different types of North Dakota Legends on Stock Certificates with Reference to Separate Document Restricting Transfer of Shares. They can vary depending on the specific terms set by the company. Some common types include: 1. Voting Restriction: This type of legend restricts the transfer of shares in a way that limits the voting rights associated with those shares. It ensures that only certain individuals or entities can exercise voting rights, maintaining control and stability within the company. 2. Ownership Restriction: This legend restricts the transfer of shares to specific parties or entities, such as existing shareholders, company employees, or qualified investors. It ensures that shares remain within a controlled group, preventing unwanted ownership changes or disruptions. 3. Preemptive Right Restriction: In some cases, a company may grant existing shareholders the preemptive right to purchase additional shares before they are offered to outside parties. This legend restricts the transfer of shares in a way that ensures the preemptive right is exercised before any external transfer occurs. 4. Qualification Requirement: This type of legend restricts the transfer of shares to individuals or entities that meet certain qualifications or criteria, such as professional licenses, certifications, or financial qualifications. It ensures that shares are transferred only to suitable and qualified parties. The North Dakota Legend on Stock Certificate with Reference to Separate Document Restricting Transfer of Shares is a crucial component of ensuring the orderly and controlled transfer of shares in a company. It protects the company's interests, shareholder rights, and overall stability. It is important for all shareholders and prospective investors to carefully review and understand the terms and restrictions outlined in this legend and the accompanying separate document to ensure compliance and avoid any potential legal consequences.
North Dakota Legend on Stock Certificate with Reference to Separate Document Restricting Transfer of Shares
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How to fill out Legend On Stock Certificate With Reference To Separate Document Restricting Transfer Of Shares?
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FAQ
A restricted security must bear a legend giving notice of the restrictions. That legend which must be removed after the restrictions are lifted. A security with a legend cannot be transferred or sold and must be removed before any transaction.
Only a transfer agent can remove a restrictive legend. But the transfer agent won't remove the legend unless you've obtained the consent of the issuer?usually in the form of an opinion letter from the issuer's counsel?that the restrictive legend can be removed.
The process of removing the restrictive legend from a stock certificate is done only to facilitate a public resale, and in no way alleviates an investor from complying with all aspects of Rule 144 at all times.
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.
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.
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.
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.
Once vested, restricted shares are assigned a fair market value. Restricted shares may also be restricted by a double-trigger provision. That means that an employee's shares become unrestricted if the company is acquired by another and the employee is fired in the restructuring that follows.
