Form 425—General Information
(Restriction on the Transfer of Shares)
The attached form is drafted to meet minimal statutory filing requirements pursuant to the relevant code
provisions. This form and the information provided are not substitutes for the advice and services of an
attorney and tax specialist.
Commentary
This form has been promulgated to comply with the provisions of the Texas Business Organizations
Code (BOC) as well as prior law regarding filing a statement regarding a bylaw or agreement that
restricts the transfer of shares or other securities by a for-profit corporation. There are not substantive
differences in the filing of the statement under prior law and under the BOC. Consequently, instructions
for the form only make statutory references to the BOC.
A restriction on the transfer or registration of a corporate security may be imposed by the corporation’s
certificate of formation, the corporation’s bylaws, a written agreement among two or more holders of the
securities; or a written agreement among one or more holders of the securities and the corporation if
certain requirements are met (BOC § 21.209).
Section 21.212 of the BOC provides that a corporation that has adopted a bylaw or is a party to an
agreement that restricts the transfer of shares or other securities of the corporation may file the bylaw or
agreement for public record. This is a permissive filing. The fact that a statement has been filed may be
stated on a certificate representing the restricted shares or securities if required by section 3.202 of the
BOC.
Instructions for Form
• Entity Information: The statement must contain the legal name of the entity. It is recommended
that the file number assigned by the secretary of state be provided to facilitate processing of the
document.
• Bylaw or Agreement Restricting Transfer: The bylaw or agreement restricting transfer must be
attached to the statement as an exhibit. Further, the statement must indicate that the attached bylaw
or agreement is a true and correct copy.
• Statement of Approval: As required by section 21.212(a)(3) of the BOC, the filing must include a
statement that the filing was authorized by the board of directors of the corporation, or, in the case of
a corporation that is managed in some other manner under a shareholders’ agreement, by the person
empowered by the agreement to manage the corporation’s business and affairs.
• Effectiveness of Filing: A statement becomes effective when filed by the secretary of state (option
A). However, pursuant to sections 4.052 and 4.053 of the BOC the effectiveness of the instrument
may be delayed to a date not more than ninety (90) days from the date the instrument is signed
(option B). The effectiveness of the instrument also may be delayed on the occurrence of a future
event or fact, other than the passage of time (option C). If option C is selected, you must state the
manner in which the event or fact will cause the instrument to take effect and the date of the 90
th
day
after the date the instrument is signed. In order for the instrument to take effect under option C, the
entity must, within ninety (90) days of the filing of the instrument, file a statement with the secretary
of state regarding the event or fact pursuant to section 4.055 of the BOC.
Form 425
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