Code of Alabama
Ala. Code § 7-8-204 (2026)
Effect of Issuer’s Restriction on Transfer.
✓ official Alabama Legislature (ALISON) text, current July 2026
A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against a person without knowledge of the restriction unless:
(1) the security is certificated and the restriction is noted conspicuously on the security certificate; or
(2) the security is uncertificated and the registered owner has been notified of the restriction.
(Acts 1965, No. 549, p. 811; repealed by Acts 1996, No. 96-742, p. 1241, §1; added by Acts 1996, No. 96-742, p. 1241, §1.)
Notes of Decisions
Cited in 1
case, 1987–1987 · leading case: Mcmillan, Ltd. v. Warrior Drilling & Eng., 512 So. 2d 14 (Ala. 1987).
Mcmillan, Ltd. v. Warrior Drilling & Eng., 512 So. 2d 14 (Ala. 1987). “, that McMillan's unexercised option "is an `interest in the security' pursuant to § 7-8-301(1)") is "in accordance with Official Comment, Note 1 to [Code of 1975] § 7-8-204, which provides that a purchaser with actual knowledge of an unnoted restriction on the security has…”
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