Asked in Estate Planning and Securities Law for Nevada

Q: Do the State Courts have power to compel the company to lift restrictions on its stock?

The company refuses to lift restrictions on sale from the shares I inherited from my father who was an executive. They do not provide justification, looks like it is a bad faith to force me to sell the stock through them at a much lower price.

Father passed away 10 years ago after he received these shares. I have inherited these shares recently.

The amount of shares is only a tiny fraction of their daily trading volume (less than 5%).

Hence, I am wondering whether the State Court is the right venue to litigate this issue. Do I have a good chance to win if the company fails to justify reatrictions?

Edit: the company is public US company listed in Nasdaq

2 Lawyer Answers
Nina Whitehurst
Nina Whitehurst
PREMIUM
Answered
  • Estate Planning Lawyer
  • Crossville, TN

A: The answer to your question is most likely no. Corporations are subject to very strict laws regarding the issuance of stock to non-insiders. Public offerings are extremely expensive. Even private offerings must be done in accordance with strict rules requiring certain minimum disclosures and offering only to insiders or persons with a certain minimum net worth or income or both. That too is expensive. A securities attorney can help you sort this out but be prepared for the answer that you didn’t want.

Robert W. Pearce
Robert W. Pearce
PREMIUM
Answered
  • Securities Law Lawyer
  • Boca Raton, FL

A: Unless an arbitration agreement is tied to your father's shares you can file in court.

With a proper demand on the corporation, compliance with applicable exemptions from registration, and an opinion letter, restrictive legends can be ordered to be removed by a state or federal court with jurisdiction.

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