Corporate Stock-Transfer Restriction and Certificate-Legend Requirements in Massachusetts

At a glance

Requirements one by one

Authorized records and outstanding-share approval

Mass. G.L. c. 156D, § 6.27(a) permits a restriction in the articles of organization, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation.

Massachusetts gives earlier-issued shares three routes. The holders may be parties to the restriction agreement, may have voted for the restriction, or the restriction may appear in an articles-or-bylaws amendment approved by the holders of the percentage of each voting group required to approve a charter amendment containing that restriction (§ 6.27(a)). The actual voting groups, outstanding shares, governing documents, and approval record therefore matter.

For this section, “shares” also includes a security convertible into or carrying a right to subscribe for or acquire shares (§ 6.27(e)).

Permitted purposes and forms

Section 6.27(c) authorizes restrictions used to maintain a corporate status dependent on shareholder number or identity, preserve a federal or state securities-law exemption, or serve another reasonable purpose.

The without-limitation list includes a first offer to the corporation or other people; an obligation for the corporation or other people to acquire the shares; approval by the corporation, holders of a class, or another person; and a prohibition involving designated people or classes. The offer and acquisition routes may operate separately, consecutively, or simultaneously. Approval and designated-person terms must not be manifestly unreasonable (§ 6.27(d)).

The surveyed provision does not separately write an ownership percentage cap, automatic-transfer mechanism, tax-attribute restriction, purchase price, valuation formula, or funding rule.

Certificate and uncertificated-share notice

An authorized restriction is valid and enforceable against the holder or the holder's transferee when its existence is noted conspicuously on the front or back of the certificate or included in the information statement for uncertificated shares. Without that notice, it is not enforceable against a person without knowledge (§ 6.27(b)).

Section 6.26(a) lets the board authorize uncertificated shares unless the articles or bylaws provide otherwise. Existing certificated shares remain in that form until surrendered. Within a reasonable time after issuing or transferring an uncertificated share, the corporation must send a written statement containing the applicable restriction information (§ 6.26(b)).

What trips people up

Massachusetts has a voting-threshold route for outstanding shares. A holder does not have to be an agreement party or have personally voted in favor when the restriction is in an articles-or-bylaws amendment approved by each voting group at the percentage Section 6.27(a) specifies.

The form list is expressly nonexclusive. Section 6.27(d) says a restriction “may, without limitation” use its four listed forms. Section 6.27(c)(3) also authorizes restrictions for any other reasonable purpose.

Amendment consequences may change. Pending H.3323 would add appraisal rights for a shareholder whose outstanding shares receive a new restriction or a materially adverse amendment through the articles or bylaws. It would not rewrite Sections 6.26 or 6.27 themselves.

Common questions

May a Massachusetts restriction appear in the bylaws?

Yes. Section 6.27(a) expressly names the bylaws, along with the articles and the two shareholder-agreement routes. For earlier-issued shares, the special voting- group amendment route may matter.

May Massachusetts require the corporation to buy restricted shares?

Yes. Section 6.27(d)(2) permits a restriction obligating the corporation or other people, separately, consecutively, or simultaneously, to acquire the shares. It does not set the price, valuation method, funding, or remedy.

Does the statute reach convertible securities?

Yes. Section 6.27(e) includes a security convertible into or carrying a right to subscribe for or acquire shares.

Can Massachusetts shares be issued without certificates?

Yes. Section 6.26 permits board authorization unless the articles or bylaws provide otherwise, requires surrender before the change affects existing certificated shares, and requires the written information statement after an uncertificated issue or transfer.

Statutes and sources

• Mass. G.L. c. 156D, § 6.27(a)-(b) — authorized records, the three routes for outstanding shares, conspicuous certificate or information-statement notice, knowledge, and holder/transferee enforcement. Official Massachusetts General Court text, accessed August 26, 2026.
• Mass. G.L. c. 156D, § 6.27(c)-(e) — authorized purposes, nonexclusive forms, manifest-unreasonableness limits, and covered convertible or subscription-right securities. Official Massachusetts General Court text, accessed August 26, 2026.
• Mass. G.L. c. 156D, § 6.26(a)-(b) — board authorization of uncertificated shares, surrender of existing certificates, and the written information statement. Official Massachusetts General Court text, accessed August 26, 2026.