Transfer restrictions are contractual or charter-imposed limits on stockholders' ability to sell, transfer, gift, pledge, or otherwise dispose of their shares. Standard tools include right of first refusal (the company gets first chance to buy), board consent requirements, lockup periods, and outright prohibitions on transfers to specific parties, used to control cap-table composition. It is the structural mechanism that allows companies to manage their cap tables and ensure that share transfers happen on the company's terms.
The standard transfer restriction tools:
Right of First Refusal (ROFR): stockholder must offer shares to the company first (and sometimes other stockholders second) at the price offered by the thi...