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Corporate — Shareholder Status – Lack of Certificate – Estoppel – Trusts & Estates – Statute of Limitations

Plaintiff claims a 10-percent ownership in the defendant-corporation, but he never received a stock certificate. The corporation’s articles of incorporation require only that shares bear a restricted legend, and North Carolina law allows a corporation to meet that requirement in either of two ways: (1) through use of a share certificate or (2) through use of another writing conveying the statutorily required information. The court cannot conclude as a matter of law that plaintiff is not a shareholder merely because he has not produced a stock certificate.

The court denies the parties’ cross-motions for summary judgment.

If shares are uncertificated, G.S. §§ 55-6-26(b) and 55-6-27 demand that, within a reasonable time after issuance or transfer, the corporation send the shareholder a writing containing the basic information required to be on certificates (the name of issuing company; the fact that the issuing company is organized under North Carolina law; the name of the person to whom shares are issued; the number and class of shares; and, if applicable, any restrictions on transfer).

In this case, a jury could reasonably conclude that the several writings received by plaintiff in the course of his work for the corporation, when read together, convey the information required by statute. Whether the corporation sent the information to plaintiff within a “reasonable time” after the alleged transfer of shares to him is an issue of fact that remains to be determined.

Plaintiff attempts to apply equitable estoppel offensively in support of his own claim by pointing to corporate documents in which he and defendants’ decedent (owner of either 90 percent or 100 percent of the corporation’s shares) identified plaintiff as a 10-percent owner of the corporation. North Carolina law does not recognize an affirmative claim for equitable estoppel.

Disputed material facts preclude application of the doctrine of quasi-estoppel against defendants on this record.

Plaintiff failed to file suit against the decedent’s estate within the time prescribed by G.S. § 28A-19-16. While his failure to file a timely action under § 28A-19-16 may affect any claims he brings as a creditor, that failure does not determine his rights as an owner.

Motions denied.

Faw v. Wilkes Sombrero, Inc. 2021 NCBC 80.pdf ( (Lawyers Weekly No. 020-080-21, 20 pp.) (Julianna Theall Earp, J.) Joshua Bennett and Michael Hendrix Blankenship for plaintiff; John Michael Logsdon for defendants. 2021 NCBC 80


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