A. The articles of incorporation, the bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.
B. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection B of § 13.1-648. Unless so noted or contained, a restriction is not enforceable against a person without knowledge of the restriction.
C. A restriction on the transfer or registration of transfer of shares is authorized:
1. To maintain the corporation's status when it is dependent on the number or identity of its shareholders;
2. To preserve exemptions under federal or state securities law; or
3. For any other reasonable purpose.
D. A restriction on the transfer or registration of transfer of shares may:
1. Obligate the shareholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted shares;
2. Obligate the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted shares;
3. Require the corporation, the holders of any class or series of its shares, or other persons to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; or
4. Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
E. For purposes of this section, "shares" includes any warrants, rights, or options to acquire any shares or any security or other obligation of the corporation convertible into or carrying a right to subscribe for or acquire any such shares or warrants, rights, or options to acquire any such shares.
1985, c. 522; 2005, c. 765; 2015, c. 611; 2019, c. 734.
Notes of Decisions
Barber v. VistaRMS, Inc., 634 S.E.2d 706 (Va. 2006).
· cites it 8× “Barber next contends that the termination provisions in the 1999 and 2002 Addenda are unenforceable under Code § 13.1-649(C)(3) because they do not serve a "reasonable purpose," because they "work a forfeiture in contravention of public policy," and because VistaRMS acted in…”
Dawyot v. Catawba Capital Mgmt., Inc., 82 Va. Cir. 521 (Roanoke County Cir. Ct. 2011).
· cites it 5× “1-671.1 (A) (2011) (emphasis added). The agreement in this case is not among the shareholders but rather between most of the shareholders and the corporation.”
Square Deal Demolition, Inc. v. Doxie, 74 Va. Cir. 441 (Norfolk Cir. Ct. 2008).
· cites it 3× “See Va. Code § 13.1-649(A) (2007). Therefore, Aron Doxie should be able to transfer his shares to Josephus Doxie.”
Pallas v. Tiger Fuel Co., 47 Va. Cir. 316 (Charlottesville Cir. Ct. 1998).
· cites it 2× “Va. Code Ann. § 13.1-649 provides: A. The articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation.”
Mardula v. Shamshiry, Inc., 49 Va. Cir. 55 (Fairfax Cir. Ct. 1999).
· cites it 2× “Defendants argue that the shares of stock are restricted; however, Virginia Code § 13.1-649 provides that a restriction on foe transfer or registration of transfer of shares is valid and enforceable against foe holder or transferee only if foe restriction is conspicuously on foe…”
— Va. Code Ann. § 13.1-649(A) — 2 cases
Square Deal Demolition, Inc. v. Doxie, 74 Va. Cir. 441 (Norfolk Cir. Ct. 2008).
“See Va. Code § 13.1-649(A) (2007). Therefore, Aron Doxie should be able to transfer his shares to Josephus Doxie.”
Dawyot v. Catawba Capital Mgmt., Inc., 82 Va. Cir. 521 (Roanoke County Cir. Ct. 2011).
“1-671.1 (A) (2011) (emphasis added). The agreement in this case is not among the shareholders but rather between most of the shareholders and the corporation.”
— Va. Code Ann. § 13.1-649(C)(3) — 1 case
Barber v. VistaRMS, Inc., 634 S.E.2d 706 (Va. 2006).
“Barber next contends that the termination provisions in the 1999 and 2002 Addenda are unenforceable under Code § 13.1-649(C)(3) because they do not serve a "reasonable purpose," because they "work a forfeiture in contravention of public policy," and because VistaRMS acted in…”
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