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

At a glance

Requirements one by one

Authorized records, earlier shares, and the dissolution-purchase election

Mont. Code Ann. § 35-14-627(1) permits a restriction in the articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation. A share issued before adoption is unaffected unless its holder is a party to the restriction agreement or voted for the restriction.

The same provision expressly allows those records to restrict, alter, or eliminate the application of § 35-14-1434. That separate section ordinarily allows the corporation or shareholders to elect to purchase a petitioning shareholder's shares at fair value in lieu of judicial dissolution. Whether and how to modify that election, and the valuation and dissolution consequences, are outside this survey.

For § 35-14-627, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

Permitted purposes and forms

Section 35-14-627(3) 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 listed forms are 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 series, or other people; 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.

The surveyed provision does not separately prescribe an ownership percentage cap, mandatory or automatic transfer, tax-attribute or general regulatory- compliance route, purchase price, valuation formula, funding method, or remedy.

Corporate and UCC notice rules

An authorized general restriction is valid and enforceable against a shareholder or the shareholder's transferee when its existence is noted conspicuously on the certificate or included in the written information statement for uncertificated shares. Without that notice, § 35-14-627(2) says it is not enforceable against a person without knowledge.

Montana's UCC defines “knowledge” as actual knowledge in § 30-1-210(2). Current § 30-8-214 separately makes an issuer-imposed restriction ineffective against a person without actual knowledge unless a certificated security conspicuously notes the restriction or the registered owner of an uncertificated security was notified. Section 30-8-204 is repealed and is not the current Montana rule.

Unless the articles or bylaws provide otherwise, § 35-14-626 lets the board authorize some or all classes or series without certificates. Existing certificates remain until surrender. Within a reasonable time after an uncertificated issue or transfer, the corporation delivers the shareholder the applicable certificate and restriction information.

Unanimous shareholder-agreement overlay

Section 35-14-732 covers a special shareholder agreement. It must be in the articles or bylaws and approved by all current shareholders, or in a written agreement signed by all current shareholders and made known to the corporation. Amendment ordinarily requires all current shareholders unless the agreement provides otherwise. Any duration limit must be stated in the agreement.

The agreement's existence must be noted conspicuously on each outstanding certificate or on the uncertificated-share information statement. Existing certificates must be recalled and replaced. Missing notice does not invalidate the agreement or an action under it, but a purchaser without knowledge is entitled to rescind. Certificate or statement notice, plus delivery of the statement at or before an uncertificated purchase, establishes the statutory knowledge route. The rescission action is due by the earlier of 90 days after discovery or two years after purchase.

What trips people up

Montana's current UCC numbering is different. The operative issuer- restriction rule is § 30-8-214. Section 30-8-204 is expressly repealed, so a form or agreement citing it is using the wrong current section number.

The restriction may reach a dissolution remedy. Section 35-14-627 does more than authorize transfer limits: it expressly permits alteration or elimination of § 35-14-1434's purchase election. That choice can affect a judicial-dissolution dispute and requires transaction-specific advice.

The general and unanimous-agreement consequences differ. Missing general restriction notice prevents enforcement against a protected person. Missing special-agreement notice does not invalidate the agreement or action under it; it creates a purchaser's time-limited rescission right.

Common questions

May a Montana restriction appear in the bylaws?

Yes. Section 35-14-627(1) expressly names the bylaws. A qualifying section 35-14-732 agreement may also be placed there, but all current shareholders must approve it.

May Montana require the corporation to buy restricted shares?

Yes. Section 35-14-627(4)(b) permits a restriction obligating the corporation or other people, separately, consecutively, or simultaneously, to acquire the shares. It does not set the trigger, price, valuation method, funding, or remedy.

Must the special shareholder agreement state an end date?

No fixed statutory term appears in § 35-14-732. Subsection (8) says any limits on the agreement's duration must be set forth in the agreement.

Can Montana shares be issued without certificates?

Yes, when the articles or bylaws do not provide otherwise. Section 35-14-626 preserves existing certificates until surrender and requires the written information statement after an uncertificated issuance or transfer.

Statutes and sources

• Mont. Code Ann. § 35-14-627(1)-(2) — authorized records, restriction of the dissolution-purchase election, earlier-share assent, certificate or information-statement notice, knowledge, and shareholder/transferee effect. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 35-14-627(3)-(5) — authorized purposes, enumerated forms and sequencing, manifest-unreasonableness limits, and covered convertible or subscription-right securities. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 35-14-626 — board authorization of uncertificated shares, surrender of existing certificates, and the written information statement. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 35-14-732(1)(h), (2)-(3), and (8) — unanimous- agreement form, amendment and duration; certificate and information-statement notice; certificate recall; purchaser rescission; and limitation period. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 35-14-1434(1) — fair-value purchase election that a qualifying restriction may alter, eliminate, or otherwise restrict. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 30-1-210(2) — UCC actual knowledge. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 30-8-204 — repealed former Article 8 section. Official Montana Code Annotated text, accessed August 26, 2026.
• Mont. Code Ann. § 30-8-214 — current UCC effectiveness rule for issuer- imposed restrictions on certificated and uncertificated securities. Official Montana Code Annotated text, accessed August 26, 2026.