Ala. Code § 10A-30-2.05 (1975) Issuance Or Transfer of Shares of a Close Corporation In Breach of Qualifying Conditions; Applicable to Corporations Formed As Close Corporations Or Electing Close Corporation Status Prior to January 1, 1995

• Library: Alabama Statutes
• Edition: 2023
• Currency: Current with legislation from the 2023 Regular and Special Sessions.
• Year: 2023
• Citation: Ala. Code § 10A-30-2.05 (1975)

(a) If shares of a close corporation are issued or transferred to any person who is not entitled under any provision of the certificate of formation permitted by Section <codecitation statecd="AL" sessionyear="2023" datatype="S" title="10A" catchline=""Close corporation" defined; contents of certificate of formation; number of shareholders; applicable to corporations formed as close corporations or electing close corporation status prior to January 1, 1995">10A-30-2.02</codecitation> to be a holder of record of shares of the corporation, and if the certificate for shares conspicuously notes the qualifications of the persons entitled to be holders of record thereof, such person is conclusively presumed to have notice of the fact of his or her ineligibility to be a shareholder.</subsect>

(b) If a certificate for shares of any close corporation conspicuously notes the fact of a restriction on transfer of shares of the corporation and the restriction is one which is permitted by the Alabama Business Corporation Law, the transferee of the shares is conclusively presumed to have notice of the fact that he or she has acquired shares in violation of the restriction, if such acquisition violates the restriction.

(c) Whenever any person to whom shares of a close corporation have been issued or transferred has, or is conclusively presumed under this section to have notice either that he or she is a person not eligible to be a holder of shares of the corporation, or that the transfer of shares is in violation of a restriction on transfer of shares, the corporation may, at its option, refuse to register transfer of the shares into the name of the transferee in addition to any remedies which may be available under the Alabama Business Corporation Law.