Texas Business Corporation Act - Article 2.22. Transfer Of Shares And Other Securities And Restrictions On Transfer

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Art. 2.22. Transfer of Shares and Other Securities and Restrictions 
on Transfer

A. The shares and other securities of a corporation shall be 
personal property for all purposes and shall be transferable in 
accordance with the provisions of Chapter 8--Investment 
Securities--of the Business & Commerce Code, as amended, except as 
otherwise provided in this Act.

B. A restriction on the transfer or registration of transfer of a 
security, or on the amount of the corporation's securities that may 
be owned by any person or group of persons, may be imposed by the 
articles of incorporation, or by-laws, or a written agreement among 
any number of the holders of such securities, or a written agreement 
among any number of the holders and the corporation provided a 
counterpart of such agreement shall be placed on file by the 
corporation at its principal place of business or its registered 
office and shall be subject to the same right of examination by a 
shareholder of the corporation, in person or by agent, attorney or 
accountant, as are the books and records of the corporation.  No 
restriction so imposed shall be valid with respect to any security 
issued prior to the adoption of the restriction unless the holder of 
the security voted in favor of the restriction or is a party to the 
agreement imposing it.

C. Any restriction on the transfer or registration of transfer of a 
security of a corporation, if reasonable and noted conspicuously on 
the certificate or other instrument representing the security or, 
in the case of an uncertificated security, if reasonable and if 
notation of the restriction is contained in the notice sent 
pursuant to Section D of Article 2.19 of this Act with respect to 
the security, shall be specifically enforceable against the holder 
of the restricted security or any successor or transferee of the 
holder.  Unless noted conspicuously on the certificate or other 
instrument representing the security or, in the case of an 
uncertificated security, unless notation of the restriction is 
contained in the notice sent pursuant to Section D of Article 2.19 
of this Act with respect to the security, a restriction, even though 
otherwise enforceable, is ineffective against a transferee for 
value without actual knowledge of the restriction at the time of the 
transfer or against any subsequent transferee (whether or not for 
value), but such a restriction shall be specifically enforceable 
against any other person who is not a transferee for value from and 
after the time that the person acquires actual knowledge of the 
existence of the restriction.

D. In particular and without limiting the general power granted in 
Sections B and C of this Article to impose reasonable restrictions, 
a restriction on the transfer or registration of transfer of 
securities of a corporation shall be valid if it reasonably:

(1) Obligates the holders of the restricted securities to offer to 
the corporation or to any other holders of securities of the 
corporation or to any other person or to any combination of the 
foregoing, a prior opportunity, to be exercised within a reasonable 
time, to acquire the restricted securities;  or

(2) Obligates the corporation to the extent permitted by this Act or 
any holder of securities of the corporation or any other person, or 
any combination of the foregoing, to purchase the securities which 
are the subject of an agreement respecting the purchase and sale of 
the restricted securities;  or

(3) Requires the corporation or the holders of any class of 
securities of the corporation to consent to any proposed transfer 
of the restricted securities or to approve the proposed transferee 
of the restricted securities for the purpose of preventing 
violations of federal or state laws;  or

(4) Prohibits the transfer of the restricted securities to 
designated persons or classes of persons, and such designation is 
not manifestly unreasonable;  or

(5) Maintains the status of the corporation as an electing small 
business corporation under Subchapter S of the United States 
Internal Revenue Code, maintains any other tax advantage to the 
corporation, or maintains the status of the corporation as a close 
corporation under Part Twelve of this Act;  or

(6) Obligates the holder of the restricted securities to sell or 
transfer an amount of restricted securities to the corporation, to 
any other holders of securities of the corporation, or to any other 
person or combination of persons;  or

(7) Causes or results in the automatic sale or transfer of an amount 
of restricted securities to the corporation, to any other holders 
of securities of the corporation, or to any other person or 
combination of persons.

E. A corporation that has adopted a bylaw, or is a party to an 
agreement, restricting the transfer of its shares or other 
securities may file such bylaw or agreement as a matter of public 
record with the Secretary of State, as follows:

(1) The corporation shall file a copy of the bylaw or agreement in 
the office of the Secretary of State together with an attached 
statement setting forth:

(a) the name of the corporation;                                              

(b) that the copy of the bylaw or agreement is a true and correct 
copy of the same;  and

(c) that such filing has been duly authorized by the board of 
directors or, in the case of a close corporation that, in 
conformance with Part Twelve of this Act, is managed in some other 
manner pursuant to a shareholders' agreement, by the shareholders 
or by the persons empowered by the agreement to manage its business 
and affairs.

(2) Such statement shall be executed on behalf of the corporation by 
an officer.  The original and a copy of the statement shall be 
delivered to the Secretary of State with copies of such bylaw or 
agreement restricting the transfer of shares or other securities 
attached thereto.  If the Secretary of State finds that such 
statement conforms to law and the appropriate filing fee has been 
paid as prescribed by law, he shall:

(a) endorse on the original and the copy the word "Filed", and the 
month, day, and year of the filing thereof;

(b) file the original in his office;  and                                     

(c) return the copy to the corporation or its representative.                 

(3) After the filing of such statement by the Secretary of State, 
the bylaw or agreement restricting the transfer of shares or other 
securities shall become a matter of public record and the fact of 
such filing shall be stated on any certificate representing the 
shares or other securities so restricted if required by Section G, 
Article 2.19, of this Act.

F. A corporation that is a party to an agreement restricting the 
transfer of its shares or other securities may make such agreement 
part of its articles of incorporation without restating the 
provisions of such agreement therein by complying with the 
provisions of Part Four of this Act for amendment of the articles of 
incorporation.  If such agreement shall alter any provision of the 
original or amended articles of incorporation, the articles of 
amendment shall identify by reference or description the altered 
provision.  If such agreement is to be an addition to the original 
or amended articles of incorporation, the articles of amendment 
shall state that fact.  The articles of amendment shall have 
attached thereto a copy of the agreement restricting the transfer 
of shares or other securities, and shall state that the attached 
copy of such agreement is a true and correct copy of the same and 
that its inclusion as part of the articles of incorporation has been 
duly authorized in the manner required by this Act to amend the 
articles of incorporation.

G. When shares are registered on the books of a corporation in the 
names of two or more persons as joint owners with the right of 
survivorship, after the death of a joint owner and before the time 
that the corporation receives actual written notice that parties 
other than the surviving joint owner or owners claim an interest in 
the shares or any distributions thereon, the corporation may record 
on its books and otherwise effect the transfer of those shares to 
any person, firm, or corporation (including that surviving joint 
owner individually) and pay any distributions made in respect of 
those shares, in each case as if the surviving joint owner or owners 
were the absolute owners of the shares.  A corporation permitting 
such a transfer by and making any distribution to such a surviving 
joint owner or owners before the receipt of written notice from 
other parties claiming an interest in those shares or distributions 
is discharged from all liability for the transfer or payment so 
made;  provided, however, that the discharge of the corporation 
from liability and the transfer of full legal and equitable title of 
the shares in no way affects, reduces, or limits any cause of action 
existing in favor of any owner of an interest in those shares or 
distributions against the surviving owner or owners.

H. A restriction on the transfer or the registration of a transfer 
of the securities of a corporation, the amount of securities of a 
corporation, or the amount of securities of a corporation that may 
be owned by a person or group of persons for any of the following 
purposes is conclusively presumed to be for a reasonable purpose:

(1) maintaining a local, state, federal, or foreign tax advantage 
to the corporation or its shareholders, including:

(a) maintaining the corporation's status as an electing small 
business corporation under Subchapter S of the Internal Revenue 
Code of 1986;

(b) maintaining or preserving any tax attribute, including net 
operating losses;  or

(c) qualifying or maintaining the qualification of the corporation 
as a real estate investment trust under the Internal Revenue Code of 
1986 or regulations adopted under the Internal Revenue Code of 
1986;  or

(2) maintaining a statutory or regulatory advantage or complying 
with a statutory or regulatory requirement under applicable local, 
state, federal, or foreign law.

Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955.  Amended by 
Acts 1957, 55th Leg., p. 111, ch. 54, Sec. 3, 4;  Acts 1967, 60th 
Leg., p. 1719, ch. 657, Sec. 5, eff. June 17, 1967;  Acts 1973, 63rd 
Leg., p. 1493, ch. 545, Sec. 12, eff. Aug. 27, 1973;  Acts 1975, 64th 
Leg., p. 306, ch. 134, Sec. 4, 5, eff. Sept. 1, 1975;  Acts 1979, 
66th Leg., p. 223, ch. 120, Sec. 26, eff. May 9, 1979;  Acts 1981, 
67th Leg., p. 838, ch. 297, Sec. 14, eff. Aug. 31, 1981;  Acts 1981, 
67th Leg., p. 3113, ch. 818, Sec. 3, eff. Aug. 31, 1981;  Acts 1985, 
69th Leg., ch. 128, Sec. 7, eff. May 20, 1985;  Acts 1987, 70th Leg., 
ch. 93, Sec. 8, eff. Aug. 31, 1987;  Acts 1989, 71st Leg., ch. 801, 
Sec. 8, eff. Aug. 28, 1989.

Sec. B amended by Acts 2003, 78th Leg., ch. 238, Sec. 8, eff. Sept. 
1, 2003;  Sec. D amended by Acts 2003, 78th Leg., ch. 238, Sec. 8, 
eff. Sept. 1, 2003;  Sec. H added by Acts 2003, 78th Leg., ch. 238, 
Sec. 8, eff. Sept. 1, 2003.

Last modified: August 10, 2007