Colorado § 7-116-106 - Information respecting shares.

§ 7-116-106. Information respecting shares.

Upon the written request of any shareholder, a corporation shall deliver to the shareholder, at the corporation's expense, the information specified by section 7-106-206 (4), whether or not the information is also contained or summarized on any share certificate of the shareholder.

Source: L. 93: Entire article added, p. 847, § 1, effective July 1, 1994. L. 2021: Entire section amended, (HB 21-1124), ch. 41, p. 172, § 31, effective April 19.

ANNOTATION

I. General Consideration.

II. Signatures of Officers.

III. Notice of Restrictions and Variations in Shares.

I. GENERAL CONSIDERATION.

Law reviews. For note, "Discount, Bonus and Watered Stock in Colorado", see 33 Rocky Mt. L. Rev. 197 (1961). For article, "The 1985 Proposed Revisions to the Colorado Corporation Code", see 14 Colo. Law. 34 (1985).

Annotator's note. Since § 7-116-106 is similar to § 7-4-108 as it existed prior to the 1993 recodification of the "Colorado Business Corporation Act", articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.

II. SIGNATURES OF OFFICERS.

Stock certificates which have been issued without authority and are not manually signed are nonetheless genuine, and the statutory requirement of a transfer agent's countersignature on stock certificates bearing facsimile signatures does not render them invalid or preclude bona fide purchase. Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

For noncompliance with this section does not render certificates nongenuine or constitute an absolute defense effective against a purchaser for value and without notice under § 4-8-202 (3) of the commercial code, as certificates signed in facsimile are genuine under the uniform commercial code, "genuine" meaning free of forgery or counterfeiting. Thus even though certificates are issued without authority, it cannot be said that the signatures are either forged or counterfeit, and so in this sense they are effective against the issuer. Dempsey-Tegeler & Co. v. Otis Oil & Gas Corp., 293 F. Supp. 1383 (D. Colo. 1968).

III. NOTICE OF RESTRICTIONS AND VARIATIONS IN SHARES.

The purpose of this section is to ensure that a purchaser of stock has notice of voting restrictions at the time of purchase. Hampton v. Tri-State Fin. Corp., 30 Colo. App. 420, 495 P.2d 566 (1972).

The requirement of subsection (2) is aimed at avoiding shareholder misunderstandings. Hackbart v. Holmes, 675 F.2d 1114 (10th Cir. 1982).

However, this section does not require that the certificate carry the exact restrictions on the certificate, but only that the shareholder be informed by the certificate that upon request the corporation will furnish him with information as to classes of stock and their various restrictions. Hampton v. Tri-State Fin. Corp., 30 Colo. App. 420, 495 P.2d 566 (1972).

Yet this section makes no provision as to the consequences of a violation. Hampton v. Tri-State Fin. Corp., 30 Colo. App. 420, 495 P.2d 566 (1972).

But the stock contract is voidable. Absent a showing of actual knowledge at the time of purchase, failure to follow the statute renders the stock contract voidable on the part of the stockholder. Hampton v. Tri-State Fin. Corp., 30 Colo. App. 420, 495 P.2d 566 (1972).

And rescission is the most appropriate remedy. Where notice has not been given pursuant to the statute and where actual knowledge cannot be shown by the corporation, then, in the absence of fraud, rescission is the most appropriate remedy. Hampton v. Tri-State Fin. Corp., 30 Colo. App. 420, 495 P.2d 566 (1972).