Delaware Legend on Stock Certificate with Reference to Separate Document Restricting Transfer of Shares The Delaware Legend on a stock certificate refers to a statement that signifies the presence of a separate document that imposes restrictions on the transferability of shares. This legend acts as a notice to potential buyers, alerting them to the existence of certain limitations or conditions associated with the shares they intend to purchase. Such restrictions may include the requirement of obtaining approval from the company's board of directors or majority shareholders before transferring the shares to another party. There are several types of Delaware Legends on Stock Certificates, each representing specific restrictions or conditions that may apply to the transfer of shares: 1. Restriction on Transfer Legend: This legend highlights the restrictions imposed on the transferability of shares, making it clear that the shares cannot be transferred without complying with the terms outlined in the separate document restricting their transfer. 2. Right of First Refusal Legend: This legend denotes that existing shareholders or the company itself hold the right to purchase the shares before they can be sold to any third party. It guarantees that the shareholders have the opportunity to maintain their proportional ownership in the company. 3. Lock-Up Legend: This legend indicates that the shares are subject to a predetermined lock-up period during which they cannot be sold or transferred. It is commonly used in initial public offerings (IPOs) to prevent insiders or early investors from flooding the market with their shares immediately after the company goes public. 4. Voting Rights Restriction Legend: This legend signifies that the shares being issued carry limited or no voting rights. It may be applicable to shares held by preferred shareholders or holders of a specific class of shares, where their voting powers are restricted compared to common shareholders. 5. Buy-Sell Agreement Legend: This legend signifies the inclusion of a specific buy-sell agreement, which outlines the predetermined terms and conditions for buying or selling shares between shareholders. It ensures that shares can only be transferred according to the specified arrangements mentioned in the separate document. The Delaware Legend on Stock Certificates plays a crucial role in protecting the interests of both the company and its shareholders. By explicitly referring to a separate document that restricts the transfer of shares, it promotes transparency and helps potential buyers make informed decisions while emphasizing the importance of adhering to the prescribed rules and regulations. Please note that this description provides a general understanding of the concept and does not serve as legal advice. It is advised to consult with professionals or legal experts for specific guidance regarding Delaware Legends on Stock Certificates and related transfer restrictions.
Delaware Legend on Stock Certificate with Reference to Separate Document Restricting Transfer of Shares
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How to fill out Delaware Legend On Stock Certificate With Reference To Separate Document Restricting Transfer Of Shares?
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If you want to dispose of or move restricted or control securities, the rules and states of the legend and standard transfer necessities must be met. Before the transaction is approved, the issuer's attorney must audit the legend, legal opinion letter, and letter of instructions.
You may not sell, assign, pledge, encumber, or otherwise transfer any interest in the Restricted Shares until the dates set forth in the Vesting Schedule set forth below, at which point the Restricted Shares will be referred to as ?Vested.? A Restricted Share shall not be subject to execution, attachment or similar ...
Restricted securities must be fully paid for and beneficially owned for a period of at least one year prior to sale. There is no required holding period for control securities that are not also restricted securities.
Transfers of uncertificated shares shall by made on the books of the corporation only by the record holder thereof, or by an attorney-in-fact, upon presentation of proper evidence of authority to transfer in ance with customary procedures for transferring shares in uncertificated form.
In order to have the legend on a stock certificate removed, investors should contact the company's shareholder relations department to find out the details of the removal process. Following that, the company will send a confirmation authorizing its transfer agent to remove the legend.
Holding period. A six-month holding period is required for ?restricted securities? of an issuer that has been a reporting company for at least 90 days.
The purpose of the restrictive legend or notation is to protect the issuing company from loosing its private placement exemption for the initial sale of the securities and to notify the investor that the restricted securities cannot be resold into the public securities market without satisfying certain requirements.
Only a transfer agent can complete the task of removing a restrictive stock legend. The transfer agent will require an opinion letter from the issuer's counsel or from his or her own lawyer plus 144 papers completed by a broker?stating that the restricted legend can be removed.
