Section 10-2A-305

Issuance or transfer of shares of a close corporation in breach of qualifying conditions.

(a) If shares of a close corporation are issued or transferred to any person who is not entitled under any provision of the articles of incorporation permitted by Section 10-2A-301 to be a holder of record of shares of such 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 ineligibility to be a shareholder.

(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 Section 10-2A-41, the transferee of the shares is conclusively presumed to have notice of the fact that he 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 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 Section 10-2A-41 or otherwise.

(d) The provisions of subsection (c) of this section shall not be applicable if the transfer of shares even though otherwise contrary to subsections (a) or (b) of this section, has been consented to by all the shareholders of the close corporation, or if the close corporation has amended its articles of incorporation in accordance with Section 10-2A-304.

(e) The term "transfer," as used in this section, is not limited to a transfer for value.

(f) The provisions of this section do not in any way impair any rights of a transferee regarding any right to rescind the transaction or to recover under any applicable warranty express or implied.

(Acts 1980, No. 80-633, p. 1094, §166.)