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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

JON HENRY, Plaintiff, v. PHIXIOS HOLDINGS, INC., a Delaware corporation, Defendant.

 In Phixios, the court is asked to rule on the ability of a corporation to place restrictions on stock ownership. In the facts presented in Phixios, it is clear that a corporation has the right, pursuant to Section 202, to place restrictions on who and under what conditions certain people may own shares in the stock of the corporation. 

The court's straightforward interpretation of Section 202 makes it clear that when a corporation purports to place restrictions on ownership or transfer of its stock that Section 202 requires actual knowledge by stockholders of such restrictions or at least disclosure of such restrictions on the face of the stock certificate.