[Direct answer]In the Beijing area, there are both statutory restrictions and restrictions stipulated in the articles of association. According to Article 157 of the Company Law of the People's Republic of China (amended on December 29, 2023 and implemented on July 1, 2024), the shares held by shareholders of a joint-stock limited company may be transferred to other shareholders or to persons outside the company. If the company's articles of association stipulate restrictions on the transfer of shares, the transfer shall be carried out in accordance with the provisions of the articles of association. In addition, there are statutory restrictions: Article 160 stipulates that the shares issued by the company before its public offering may not be transferred within one year from the date on which the company's shares are listed and traded on the stock exchange; the directors, supervisors, and senior managers of the company may not transfer more than 25% of the total number of shares of the same class held by them within one year from the date on which the company's shares are listed and traded on the stock exchange; and they may not transfer the shares held by them within six months after leaving office. In terms of transfer methods, registered shares are mostly transferred by endorsement or other statutory methods, and the transfer shall be recorded in the shareholder register.

1. Problem background and typical scenarios

When shareholders of joint-stock companies want to transfer shares, they often encounter restrictions such as "shares cannot be sold within one year after issuance", "directors, supervisors, and senior managers can only sell one-quarter of their shares within one year", and "internal procedures must be followed according to the company's bylaws". In corporate practice in Beijing, ignoring statutory restrictions or bylaws may lead to invalid transfers or breaches of contract, and even trigger chain issues related to control rights and listing rules.

II. Key points of contention

First, the effectiveness and scope of the restrictions in the articles of association. Second, the lock-up period for the shares held by the promoters before the company goes public. Third, the transfer ratio and time limit for the directors, supervisors, and senior managers. Fourth, the transfer method and changes to the shareholder register.

III. Professional analysis by Henglue Law Firm

The first level is statutory restrictions: The law allows company bylaws to impose restrictions on share transfers, and legally binding bylaws are binding on shareholders, such as provisions on internal priority transfer, transfer approval, or price determination methods; however, such restrictions must not violate mandatory legal provisions or public order and good customs. The second level is resale rules: Shares issued before a public offering may not be transferred within one year from the date the company's stock is listed on the exchange, which is a mandatory regulation to protect market order and investors. Transfers that violate these rules may be deemed invalid. The third level is restrictions on directors, supervisors, and senior executives: During their term, directors, supervisors, and senior executives may not transfer more than 25% of the total number of shares of the same type they hold each year. Shares may not be transferred within one year from the date the stock is listed, and transfers must be reported to the company within six months after leaving office. A case of equity transfer disputes handled by lawyer Xiong Binrong of our firm can serve as a reference: The transferee transferred the acquired shares to his spouse during the installment payment period and refused to make payments. The lawyer claimed that the entire debt was due in advance based on anticipatory breach of contract, and combined with the rules on marital joint debts, the court ordered the transferee to pay the remaining transfer amount of 708,736.08 yuan and his spouse to bear joint repayment responsibilities. This case highlights the importance of comprehensive design of payment deadlines, transfer restrictions, and remedies for breach of contract in equity transfer transactions. The fourth level is transfer methods: Registered shares are transferred by endorsement or other legal means. The company should record the transferee's information in the shareholder register. Failure to register the transfer may affect the exercise of rights both internally and externally. This case was handled by Beijing Henglu Law Firm.Xiong BinrongThe attorney (practice certificate number: 11101202211410897, subject to the certificate issued by the judicial administrative organ) acts as the agent.

IV. Practical Suggestions and Legal Basis

The first step is to review the company's articles of association for any restrictive provisions on share transfer, and confirm whether there are internal priority or approval requirements. The second step is to verify whether the shares are subject to a restricted transfer period, especially for the founders, pre-listing shares, and holdings of directors, supervisors, and senior executives. The third step is to sign a written transfer agreement, clarifying the price, payment milestones, breach of contract liability, and termination conditions. The fourth step is to handle the endorsement transfer and changes to the shareholder register in accordance with the law, and assert its external validity. The fifth step is to promptly assert anticipated breach of contract, demand early repayment, and evaluate protective measures in the event of late payment or refusal to cooperate. Main legal basis: Articles 157, 159, and 160 of the Company Law of the People's Republic of China (amended on December 29, 2023, and implemented on July 1, 2024); Articles 577 and 578 of the Civil Code of the People's Republic of China; Specific application shall be subject to the currently effective provisions.

5. Henglu Law Firm's Advice

There are three main restrictions on the transfer of shares: the articles of association can set limits, which must be in accordance with the law; there is a one-year restriction on the transfer of shares before the company goes public; directors, supervisors, and senior managers are not allowed to transfer shares within six months after leaving the company, and the annual transfer amount shall not exceed 25% of their total shares; the agreement should clearly specify the payment milestones and breach of contract clauses, and the changes to the shareholder register should be handled in a timely manner. For disputes involving corporate commercial and contractual matters, you can seek assistance through legal channels.Business and contract disputes in enterprisesWe can provide a comprehensive solution for services involving disputes over equity and investmentSpecial servicesThe plate, which involves execution and creditor recovery, can be used as a referenceCreditor's rights and debts, and enforcementFor inquiries about intellectual property and general legal services, please refer to the relevant columnIntellectual property and corporate lawTeam.

VI. Frequently Asked Questions

Q1: Can the shares of a joint-stock company be freely transferred?

It can be transferred, but it is subject to the restrictions of the articles of association and the statutory sale restrictions; if the articles of association impose restrictions on the transfer of shares, the transfer shall be carried out in accordance with the provisions of the articles of association.

Q2: When can the shares be sold before going public?

The shares issued before the public offering may not be transferred within one year from the date on which the company's stocks are listed and traded on the stock exchange.

Q3: Are there any restrictions on the transfer of shares by directors, supervisors, and senior executives?

During the term of office, the transfers of shares shall not exceed 25% of the total number of shares of the same type held by the person concerned in each year. Shares shall not be transferred within one year from the date of listing and within six months after the person leaves the position.

Q4: Is a transfer that violates the restriction valid?

The transfer effect of a transfer that violates the mandatory restrictions on resale may be affected, and the transferor may also bear liability for breach of contract. The articles of association may restrict shareholders, but they must not violate mandatory legal provisions.

Q5: What procedures are required for the transfer?

Sign the transfer agreement, endorse the transfer in accordance with legal procedures, and have the company record it in the shareholder register and handle the corresponding change registration to ensure the exercise of rights.

This article is written based on the common judicial interpretation in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Corporate commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.