Shares that otherwise meet California's definition of "dissenting shares" are not dissenting shares if immediately before the reorganization or short-form merger, they are listed on any national securities exchange certified by the Commissioner of Financial Protection and Innovation pursuant to Section 25100(o).  Cal. Corp. Code §  1300(b)(1).   The reason for this "market out" exception is that when a liquid trading market exists, a shareholder who is unhappy with the proposed transaction may simply sell the shares for their shares at their fair market value.  There are two exceptions to this exception, however.  Today's post discusses one of them.

The statute includes a proviso to the effect that the exception does not apply to any shares with respect to which there exists any restriction on transfer imposed by the corporation or by "any law or regulation".   Shares held by affiliates of the issuer or that are "restricted securities" are subject to the limitations of Section 5 of the Securities Act of 1933.   Rule 144 is a non-exclusive safe harbor but it imposes various conditions which must be met.  Thus, there exists a restriction on transfer imposed by law (and likely policed by the issuer).   Nonetheless, it would not be strictly accurate to say that the restrictions are imposed by Rule 144 because it is a safe harbor.  The restriction is imposed by Section 5.

Finally, to come within the "market out" exception, the statute requires that the notice of meeting of shareholders summarize Sections 1300 - 1304 of the Corporations Code.