Section 418 of the California Corporations Code requires that the following six statements appear "on the certificate", to the extent applicable:
- The fact that the shares are subject to restrictions upon transfer.
- If the shares are assessable or are not fully paid, a statement that they are assessable or the statements required by subdivision (d) of Section 409 if they are not fully paid.
- The fact that the shares are subject to a voting agreement under subdivision (a) of Section 706 or an irrevocable proxy under subdivision (e) of Section 705 or restrictions upon voting rights contractually imposed by the corporation.
- The fact that the shares are redeemable.
- The fact that the shares are convertible and the period for conversion.
- If the corporation is a statutory close corporation, the following legend: “This corporation is a close corporation. The number of holders of record of its shares of all classes cannot exceed ____ [a number not in excess of 35]. Any attempted voluntary inter vivos transfer which would violate this requirement is void. Refer to the articles, bylaws and any agreements on file with the secretary of the corporation for further restrictions.”
Only first, second and sixth statements must be conspicuous. Section 174 defines "on the certificate" to mean that a statement appears either on the face of the certificate or on the reverse with a reference thereto on the face (if there is no vignette, which side is the "face"?).
Section 418 is not the only provision of the California General Corporation Law specifying what must appear on a share certificate. Section 417 requires one of three alternative statements on a certificate if the corporation's shares are classified or if any class has two or more series. Section 409(d) specifies the disclosure required when shares are issued as partly paid. Section 423(n) limits the remedy for the collection of an assessment on fully paid shares to sale or forfeiture unless a statement of a remedy by action appears on the face of the certificate.
Division 8 of the California Corporations Code completes the statutory gallimaufry by tossing in its own requirements. For example, Section 8204 requires that a restriction on transfer must be noted conspicuously on a security certificate to be effective agains a person without knowledge of the restriction. While this is consistent with Section 418(a)(1), it is narrower in scope in that it applies only to restrictions imposed by the issuer. In addition, Section 8209 provides that a lien in favor of an issuer upon a certificated security is valid against a purchaser only if the issuer's right to the lien is noted conspicuously on the security certificate.