A bona fide purchaser of stock is shielded from the claim that the transfer was made in violation of a transfer restriction that was unknown to the purchaser and that was not noted conspicuously on the certificate.

Question

Quizplus · Accepted Answer

A bona fide purchaser is someone who purchases a stock in good faith, with no knowledge of any errors or illegality in the transaction. In such cases, the purchaser is generally protected from any claims arising from violations of transfer restrictions, as long as those restrictions were unknown to the purchaser and were not noted prominently on the certificate. This protection is known as the bona fide purchaser defense.

A Bona Fide Purchaser of Stock Is Shielded from the Claim