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
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.
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.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
