How should I restrict transfer of shares in my company?

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If you want to restrict the transfer of shares in your North Carolina company, some of the options available to you include:

  1. Right of First Refusal: This is a common provision that gives existing shareholders the right to purchase any shares that are being sold by another shareholder. This can help prevent outsiders from acquiring voting power in the corporation.
  2. Shotgun Purchase Option: This is a provision that can be included in an operating agreement for a North Carolina limited liability company (LLC) that allows members to resolve a deadlock or dispute over the value of the company. In a deadlock situation, one member can trigger the shotgun provision by making an offer to purchase the other member’s ownership interest at a specific price per unit or percentage of ownership. The other member then has the option to either sell their interest to the initiating member at that price or to buy out the initiating member at the same price.
  3. Shareholder Approval: You can require that any transfer of shares must be approved by a certain percentage of the shareholders. This can help ensure that any new shareholders are aligned with the goals and values of the corporation.
  4. Buy-Sell Agreement: A buy-sell agreement is a contract between shareholders that outlines how shares can be sold in certain circumstances, such as death, disability, or retirement. This can help ensure that shares remain in the hands of existing shareholders or are sold to individuals who are aligned with the goals and values of the corporation.
  5. Spousal Acknowledgement: To restrict the transfer of ownership of your company in the event of a divorce, you can include a provision in your operating agreement or shareholder agreement that requires a prenuptial or postnuptial agreement from any member or shareholder who wishes to transfer ownership in the event of a divorce.

It’s important to consult with a corporate attorney before implementing any restrictions on the transfer of shares to ensure that they comply with all legal requirements and protect the interests of all shareholders.

Will Blackton is a business lawyer based in Raleigh, North Carolina. You can reach Will at or (919) 636-5979.

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