Restriction on Transfer of Shares:

Restriction on Transfer of Shares:

In the absence of any specified restrictions in the articles of association, all shares are freely transferable. However, listed companies are bound by stock exchange regulations and cannot impose restrictions. Transfer restrictions typically manifest in the following ways:

1. Directors' Discretion to Refuse Transfer:

These clauses empower directors to decline the registration of any transfer at their absolute discretion, without providing reasons. Judicial intervention is only warranted in cases of bad faith, and directors are not obligated to disclose reasons unless stipulated in the articles. (Refer to cases such as Re Smith and Fawcett Ltd (1942) Ch. 304 and Berry and Stewart v. Tottenham Hotspur Football (1935) Ch 718.) Failure to promptly exercise this refusal power may result in losing the veto.

2. Pre-emption Clauses:

These clauses mandate members to offer their shares to existing members before considering external sales. Transfers in violation of the pre-emption clause are ineligible for registration, although they may still affect the beneficial interest transfer."