Shares as a Quasi-private Asset arising from Transferability Restrictions in American and Italian Jurisprudential Systems and Corporate Practice

This paper examines the legal circumstances under which shares transferability may be restricted and in specific circumstances, outrightly prohibited. As points of reference and context, shares’ transferability restrictions are examined under American and Italian jurisprudential systems. These restrictions may be imposed not only by public law through legislative acts and case law through court rulings but also by private law through provisions in firms’ articles of association, bylaws and or internal memoranda. Discussion of these law classification then follows under i) the Anti-Outsider, ii) Anti-Performance Suboptimality iii) Anti-Trust, iv) Anti-Insider Trading and v) Anti-Foreigner restriction provisions. This taxonomy can be described as the five A’s of share transferability restrictions. This thesis assigns and identifies shares as having not only a private but also a unique quasi-private characteristic. The identification and description of this quasi-private aspect of shares is a novelty in management and corporate law literature. Quasi-private shares subject to heavy transferability restrictions, inhibit a shareholder from exercising fully and freely their property rights. This article concludes by stating and after comprehensively demonstrating that share transferability restrictions are for the most part, the norm rather than the exception under American and Italian jurisprudential systems and corporate practice.