Saturday, December 6, 2014

Is any stock agreement legal if no stock certificates were never issued?

Question

Is any stock agreement legal if no stock certificates were never issued?



Answer

Stock agreements are generally evaluated under contract law. If it was a valid contract then it is enforceable even though physical certificates were not issued. Many small business keep a stock transfer ledger without giving up physical control of the stock certificates. These ledgers show that stock was "issued" without the actual physical transfer of the stock certificate.



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