Share transfer pre-emption rights can validly restrict registration where shareholders accepted the limitation as part of the share bargain.

A shareholder who accepted shares subject to a contractual pre-emption restriction was bound by that term as part of the bargain under which the shares were issued. The restriction did not bar transfer altogether; it only required the company to have the first opportunity to procure a purchaser, which was treated as a permissible and reasonable limitation on transferability. Because the shareholder and other shareholders had accepted that undertaking, later statutory provisions did not alter the position. The company was therefore entitled to refuse registration of the proposed transfer.

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Issues: Whether a shareholder's transfer of shares could be refused registration where the shareholder had accepted the shares subject to a contractual restriction giving the company a right of pre-emption over transfers to non-shareholders.

Analysis: The transferor had signed an agreement accepting the shares subject to By-law No. 37 and the restrictive footnote printed on the certificate. The issue was not merely the validity of the by-law as such, but whether the shareholder was bound by the restriction as part of the bargain under which the shares were issued. The restriction did not prohibit transfer altogether but only required the company to have the first opportunity to find a purchaser, which was treated as a permissible and reasonable limitation on transferability. The later statutory provisions did not alter the result because the case was decided on the contractual undertaking accepted by the shareholder and the other shareholders.

Conclusion: The company was entitled to refuse registration of the transfer, and the appeal succeeded.

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