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How to transfer shares
A transfer is the corporation registering a new holder. The old certificate comes in, the ledger changes, and the new certificate or written statement goes out. A restriction changes that only when the statute says the buyer is bound.
Shares move as personal property
N.J.S.A. 14A:7-12 says the shares of a corporation shall be personal property and shall be transferable in accordance with Chapter 8 of the Uniform Commercial Code, except as otherwise provided in the New Jersey corporation act. That is the clean starting sentence. The holder is not stuck with the shares. The corporation does not invent a private veto unless a restriction the statute recognizes is actually in place. Chapter 8 is the commercial-law machinery for the security. The corporation act is the overlay: who may impose a restriction, and when a buyer takes free of it.
For a closely held company the overlay is the whole transaction. Someone wants to sell. The certificate, if there is one, is surrendered. The corporation issues a new certificate to the buyer or sends the uncertificated notice. DGCL 8 Del. C. § 219(c), if the company is a Delaware corporation, says all transfers are recorded in the stock ledger, and that ledger is the only evidence of who may vote under that section. Record the transfer or the vote will follow the old name.
A transfer, in order
- Read the restriction before you accept the old certificate. N.J.S.A. 14A:7-12 says a restriction is valid only if the certificate of incorporation, the by-laws, a permitted employee benefit plan, or a written agreement imposes it. A handshake policy is not on that list.
- Check whether this buyer is bound. Unless the restriction is noted conspicuously on the security, or is in the uncertificated information statement, it is not valid against a person who becomes the holder without actual knowledge. Look at the certificate in your hand.
- If a right of first refusal applies, run it. The New Jersey section specifically allows a restriction that obligates the holder to offer the shares first to the corporation, to other holders, or to another person, within a reasonable time. It also allows a purchase obligation, a consent right, and a ban on transfers to designated persons if the designation is not manifestly unreasonable.
- Surrender the old certificate. States that let the board drop paper later still say existing certificates remain until they are surrendered. Issuing a second certificate while the first is outstanding is how the ledger breaks.
- Issue the new certificate or the written statement. Use the face rules for that state. Update the ledger the same day.
Trap: registering a transfer that skips a conspicuous first-refusal legend. If the legend is on the certificate, N.J.S.A. 14A:7-12 treats the buyer as someone who can be held to the restriction. Registering the transfer anyway does not erase the restriction. It creates a fight.
Who is bound, by state
| Statute | A buyer without notice |
|---|---|
| N.J.S.A. 14A:7-12 | Not bound unless the restriction is conspicuous on the security or in the information statement, or the buyer has actual knowledge |
| N.C. Gen. Stat. § 55-6-27(b) | Not enforceable except against a person who receives actual written notice, unless the restriction is noted conspicuously |
| RCW 23B.06.270 | Not enforceable against a person without knowledge unless noted conspicuously or included in the information statement |
| A.R.S. § 10-627(B) | Not enforceable against a person without knowledge unless noted conspicuously |
| Va. Code § 13.1-649(B) | Same pattern: conspicuous note or information statement, or knowledge |
| C.R.S. § 7-106-208(1) | A pre-existing restriction can bind a holder who acquired with knowledge, is a party, voted, or consented |
| MCL 450.1472 | Ineffective except against a person with actual knowledge, unless noted conspicuously on the instrument or the information statement |
| Cal. Corp. Code § 418(a)-(b) | A transfer restriction not stated as required is not enforceable against a transferee without actual knowledge |
North Carolina adds a written-notice path the others phrase as knowledge. If you are in North Carolina, get the notice in writing. A conversation you cannot prove is a weak version of N.C. Gen. Stat. § 55-6-27(b). California adds that the statement has to be conspicuous, and that a transferee includes a purchaser from the corporation. A brand-new issuance can be a "transfer" for that purpose. Do not issue the first certificate without the restriction if you expect to enforce it against that buyer.
Cal. Corp. Code § 418(c)-(d) goes further for a close corporation. If the certificate carries the required close-corporation legend, an attempted voluntary lifetime transfer that would push the number of holders of record over the maximum in the articles is void. That is not a buy-sell. It is a transfer the statute says does not happen. Read the legend before you register anything that would add a holder.
The new paper
The buyer should receive a certificate that meets the face rules, or the written statement the uncertificated section requires. N.J.S.A. 14A:7-11(4) still says no certificate is issued for a share until it is fully paid. A transfer of shares that were never paid does not become payable by changing the name. A.R.S. § 10-625(A) is the Arizona version of the same payment gate on issuance. If you are transferring shares that are fully paid, say so by issuing only the paid count.
Multi-class corporations repeat the class statement on the new certificate. DGCL 8 Del. C. § 151(f), N.C. Gen. Stat. § 55-6-25(c), and N.J.S.A. 14A:7-11(2) each allow the rights on the certificate or a promise of a free copy. The new holder is the person who will ask. Do not drop the legend during the reissue. The state pages walk the face rules: New Jersey, North Carolina, California.
Trap: a clean certificate issued over a restricted one. The old certificate had the legend. The new one does not. You have just created the buyer the statute protects. Copy the conspicuous note onto the replacement.
Printed Standard Certificates Class 1 - Set of 20
$56.00
Single-class corporation set
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Printed Standard Certificates Class 2 - Set of 20
$56.00
Two-class corporation set
Order this set →Certificates for the buyer
Keep a Class 1 set at $56.00 for single-class transfers and a Class 2 set at $56.00 if the company has two classes. A firm that reissues often can stock the blank set of 100 at $120.00 and complete each certificate when a transfer closes. The $0.99 print utility works for a one-off reissue if the signers are available. Record the transfer in the ledger the same day. The ledger guide is stock ledger and transfer ledger.
Mark's Corpex Certificate Print Utility
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Print your own certificate file
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Blank Standard 1 Class Stock Certificates - Set of 100
$120.00
Blank single-class forms, set of 100
Order this set →Questions
Are shares transferable?
N.J.S.A. 14A:7-12 says shares are personal property and are transferable under Chapter 8 of the Uniform Commercial Code, except as the corporation act provides.
When does a transfer restriction bind a buyer?
When it was validly imposed and is noted conspicuously, or the buyer has actual knowledge. North Carolina's version, N.C. Gen. Stat. § 55-6-27(b), also accepts actual written notice.
What restrictions can a New Jersey corporation use?
N.J.S.A. 14A:7-12 lists a first offer, a purchase obligation, a consent right, a ban on transfers to designated persons that is not manifestly unreasonable, and a restriction to keep S corporation status.
Do we cancel the old certificate?
Take it back and show the surrender in the ledger. States that discuss existing certificates say they remain outstanding until surrendered. Issuing a second live certificate for the same shares is the failure mode.
Can a close-corporation transfer be void?
Cal. Corp. Code § 418(c)-(d) says an attempted voluntary transfer that would exceed the holder cap is void if the certificate contains the required close-corporation legend.
Which records change on the day of transfer?
The ledger of issuances and transfers, which DGCL 8 Del. C. § 219(c) requires a Delaware corporation to keep, and the new certificate or written statement the holder receives.
Statutes last checked November 3, 2026. Official text: N.J.S.A. 14A:7-12; N.J.S.A. 14A:7-11; N.C. Gen. Stat. § 55-6-27(b); DGCL 8 Del. C. § 219(c).