If my corporation intends to restrict the shareholders’ right to sell their shares to whomever they please, how should that restriction be noted?

Your corporation can restrict the shareholders’ right to transfer their shares to whomever they please, so long as the restriction is reasonable and is set forth in the corporation’s articles of incorporation or bylaws. See Cal. Corp. Code §§ 204(b), 212(b)(1). In addition, to be enforceable against an outsider who buys a shareholder’s shares in violation of such a restriction (for example, a right of first refusal requiring that the shares be offered to the existing shareholders or to the corporation before they can be sold to a third party), the restriction must be stated on the stock certificates issued to the shareholders. See Cal. Corp. Code § 418. A statement regarding a stock transfer restriction usually appears on the face of the certificate, but it can also appear on the reverse side, so long as there is a reference to the restriction on the face of the certificate. See Cal. Corp. Code § 174.