Corporate Stock-Transfer Restriction and Certificate-Legend Requirements in South Carolina
At a glance
| Governing law, security, holder, and scope | S.C. Code §§ 33-6-260 to -270; ordinary domestic corporation; transfer/registration restrictions; holder and transferee; shares include convertible securities and securities carrying subscription/acquisition rights |
|---|---|
| Authorized instrument, actor, and adoption | Articles, bylaws, agreement among shareholders, or agreement between shareholders and corporation; no separate adoption actor or filing step stated beyond earlier-share party/vote gate (§ 33-6-270(a)) |
| Existing shares, holder consent, and effect | Earlier-issued share unaffected unless holder is restriction-agreement party or voted for restriction; no separate knowledge, other-consent, amendment, or renewed-assent route stated (§ 33-6-270(a)) |
| Offer, purchase, consent, and prohibited-transferee terms | First offer; corporation/other-person acquisition obligation; corporation, class holders, or another person may approve if not manifestly unreasonable; designated-person/class prohibition if not manifestly unreasonable (§ 33-6-270(d)) |
| Ownership cap, automatic transfer, tax, and regulatory routes | Shareholder-number/identity status and federal/state securities-exemption purposes authorized; no separate ownership cap, automatic-transfer, tax-attribute, or general regulatory-compliance form stated (§ 33-6-270(c)) |
| Reasonableness, manifest unreasonableness, and public policy | Other purpose must be reasonable; approval requirement and designated-person/class prohibition must not be manifestly unreasonable (§ 33-6-270(c)-(d)) |
| Certificate legend, uncertificated notice, and actual knowledge | Restriction's existence conspicuously on certificate front/back or in § 33-6-260(B) written statement sent within reasonable time; omission protects person without knowledge (§§ 33-6-260(B), 33-6-270(b)) |
| Transferee, successor, fiduciary, and stated legal effect | Authorized, noticed restriction valid and enforceable against holder or holder's transferee; missing notice yields nonenforcement against person without knowledge. No separate successor/fiduciary class, void-transfer rule, or damages remedy stated (§ 33-6-270(b)) |
| UCC, securities, public-company, valuation, and fiduciary boundaries | Uncertificated issue is limited to investment securities authorized by UCC Article 8 (§ 33-6-260(A)); § 33-6-240(B) separately addresses public-corporation rights/options/warrants. Securities legends, UCC priority, valuation, fiduciary duties, and remedies remain outside scope |
Requirements one by one
Authorized records and earlier-issued shares
South Carolina Code § 33-6-270(a) 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.
For this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares (§ 33-6-270(e)). The actual instrument must fit the statutory authorization and the existing-share party-or-vote gate.
Permitted purposes and forms
Section 33-6-270(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 permitted 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 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 (§ 33-6-270(d)).
The surveyed ordinary-corporation provision does not separately prescribe an ownership percentage cap, automatic-transfer mechanism, tax-attribute route, purchase price, valuation formula, funding method, or remedy.
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 uncertificated-share information statement. Without that notice, it is not enforceable against a person without knowledge (§ 33-6-270(b)).
Section 33-6-260(A) lets the board authorize uncertificated shares unless the articles or bylaws provide otherwise, but only to the extent that South Carolina UCC Article 8 authorizes investment securities without certificates. Existing certificated shares remain in that form until surrender. The corporation must send the written statement within a reasonable time after an uncertificated issue or transfer (§ 33-6-260(A)-(B)).
What trips people up
Earlier-share assent and transferee notice are separate gates. Party status or a favorable vote determines whether an after-adopted restriction affects an earlier-issued share. Certificate or information-statement notice, and the person's knowledge, determine enforcement against a later person (§ 33-6-270(a)-(b)).
Uncertificated shares carry an express UCC condition. Section 33-6-260(A) does not state an unlimited corporate-law election; it ties noncertificate investment securities to Chapter 8 of Title 36. This page does not decide UCC control, adverse claims, protected-purchaser status, priority, or intermediary questions.
Public-company rights restrictions use a separate provision. Section 33-6-240(B) separately addresses restrictions or conditions on rights, options, or warrants involving specified-percentage owners of a public corporation. That poison-pill and takeover-defense branch is outside this private-company survey and should not be used as ordinary § 33-6-270 authority.
Common questions
May a South Carolina restriction appear in the bylaws?
Yes. Section 33-6-270(a) expressly names the bylaws, along with the articles and the two shareholder-agreement routes. The earlier-share party-or-vote rule still applies.
May South Carolina require the corporation to buy restricted shares?
Yes. Section 33-6-270(d)(2) 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.
Does the statute reach convertible securities?
Yes. Section 33-6-270(e) includes a security convertible into or carrying a right to subscribe for or acquire shares.
Can South Carolina shares be issued without certificates?
Yes, subject to the articles or bylaws and the express UCC Article 8 condition in § 33-6-260(A). Existing certificates remain effective until surrender, and the corporation sends the applicable written information after issuance or transfer.
Statutes and sources
- S.C. Code § 33-6-270(a)-(b) — authorized records, earlier-share assent, conspicuous certificate or information-statement notice, knowledge, and holder/transferee enforcement. Official South Carolina Code Title 33, Chapter 6, accessed August 26, 2026.
- S.C. Code § 33-6-270(c)-(e) — authorized purposes, enumerated forms, manifest-unreasonableness limits, and covered convertible or subscription- right securities. Official South Carolina Code Title 33, Chapter 6, accessed August 26, 2026.
- S.C. Code § 33-6-260(A)-(B) — UCC-linked uncertificated-share authority, surrender of certificates, and the written information statement. Official South Carolina Code Title 33, Chapter 6, accessed August 26, 2026.
- S.C. Code § 33-6-240(B) — separate public-corporation rights, options, and warrants restriction authority. Official South Carolina Code Title 33, Chapter 6, accessed August 26, 2026.
Source links
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