Corporate Stock-Transfer Restriction and Certificate-Legend Requirements in North Carolina

At a glance

Requirements one by one

Four authorized sources and the earlier-share gate

North Carolina General Statutes § 55-6-27(a) permits a restriction in the articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation. The same subsection keeps an after-adopted restriction from affecting earlier-issued shares unless their holders are agreement parties or voted for it.

That consent rule answers a different question from certificate notice. A corporation cannot replace missing party status or a favorable vote for an earlier share merely by adding a legend later (§ 55-6-27(a)-(b)).

Permitted purposes, forms, and validity standards

Section 55-6-27(c) authorizes restrictions used to maintain corporate status dependent on shareholder number or identity, preserve a federal or state securities-law exemption, or serve another reasonable purpose.

Subsection (d) lists a first offer, a corporation or third-person acquisition obligation, transfer approval, a designated-person or class prohibition, and any other provision reasonably related to an authorized purpose. The offer and purchase routes may operate separately, consecutively, or simultaneously. The approval and designated-person routes must not be manifestly unreasonable (§ 55-6-27(c)-(d)).

Those form-specific tests do not replace the broader validity condition. Section 55-6-27(b) also requires the restriction not to be unconscionable under the circumstances. This page reports those standards without deciding whether a particular price, duration, purchaser class, veto, or other term satisfies them.

Certificate and uncertificated-share notice

The restriction's existence ordinarily must be noted conspicuously on the front or back of the certificate or included in the information statement for shares without certificates. If that notice is missing, the restriction is not enforceable except against a person who receives actual written notice (§ 55-6-27(b)).

Section 55-6-26(a) lets the board authorize uncertificated shares unless the articles or bylaws provide otherwise. An already-certificated share does not change form until its certificate is surrendered. The corporation must send the shareholder the required written statement within a reasonable time after issue or transfer (§ 55-6-26(a)-(b)).

What trips people up

North Carolina requires actual written notice for the omission exception. Section 55-6-27(b) does not merely say general knowledge. When the certificate or information statement lacks the restriction, the exception is a person who “receives actual written notice.”

Existing-share assent, substantive validity, and transferee notice are three different questions. An earlier-issued share needs party status or a favorable vote; the term must fit the authorization and unconscionability standards; and a later person ordinarily receives the certificate or information-statement notice (§ 55-6-27(a)-(d)).

The residual form is tied to an authorized purpose. Section 55-6-27(d)(5) permits another provision only when it is reasonably related to a purpose authorized by subsection (c). It does not itself validate every ownership cap, automatic transfer, price, or remedy.

Common questions

May a North Carolina restriction appear in the bylaws?

Yes. Section 55-6-27(a) expressly names the bylaws, along with the articles and the two shareholder-agreement routes. The earlier-share assent rule still applies to shares issued before adoption.

May the corporation be required to buy restricted shares?

Yes. Section 55-6-27(d)(2) authorizes a restriction obligating the corporation or other people, separately, consecutively, or simultaneously, to acquire the restricted shares. The statute does not prescribe the trigger, price, valuation, funding, or remedy.

Does the statute cover convertible securities?

Yes. Section 55-6-27(e) includes a security convertible into shares or carrying a right to subscribe for or acquire shares.

Can North Carolina shares be issued without certificates?

Yes. Section 55-6-26(a) permits board authorization unless the articles or bylaws provide otherwise. Existing certificates must be surrendered before the authorization affects those shares.

Statutes and sources

• N.C. Gen. Stat. § 55-6-27(a)-(b) — authorized instruments, earlier-issued shares, unconscionability, conspicuous certificate or information-statement notice, actual written notice, and holder/transferee effect. Official North Carolina General Assembly Article 6 text, accessed August 26, 2026.
• N.C. Gen. Stat. § 55-6-27(c)-(e) — authorized purposes, enumerated and residual restriction forms, manifest-unreasonableness limits, and convertible or subscription-right securities. Official North Carolina General Assembly Article 6 text, accessed August 26, 2026.
• N.C. Gen. Stat. § 55-6-26(a)-(b) — board authorization of uncertificated shares, certificate surrender, and the shareholder information statement. Official North Carolina General Assembly Article 6 text, accessed August 26, 2026.