§ 8204 Transfer Restrictions Effectiveness

Commercial Code·California

AI SummaryVerified

Key Takeaways

•If a company puts a rule on selling stocks, it only counts if the person knows about it.
•For paper stocks, the rule must be written clearly on the stock certificate.
•For digital stocks, the owner must be told about the rule directly.

Example

You buy a stock certificate from your friend, but the company had a rule that it couldn’t be sold yet.

If the rule wasn’t written on the paper stock you got, you didn’t break any rules by buying it.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source

View on CA.gov

§ 8204 Transfer Restrictions Effectiveness

A restriction on transfer of a security imposed by the issuer, even if otherwise lawful, is ineffective against a person without knowledge of the restriction unless either of the following applies: (1) The security is certificated and the restriction is noted conspicuously on the security certificate. (2) The security is uncertificated and the registered owner has been notified of the restriction. (Repealed and added by Stats. 1996, Ch. 497, Sec. 9. Effective January 1, 1997.)

Last verified: January 23, 2026

Key Terms

restriction on transfer security certificated uncertificated registered owner

References

Official text at leginfo.legislature.ca.gov
California Legislature. Commercial Code. Section 8204.

Key Takeaways

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Key Takeaways

Example

Key Terms

Related Statutes

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