In the United States, “restricted securities” are securities that are subject to restrictions on transfer by their owner or holder. They are typically acquired in unregistered, private offerings either directly from the company issuing them or an affiliate of that company. Investors that purchase or receive securities in, among others, private placements, Rule 506(c) offerings or pursuant to an employee stock benefit plans receive restricted securities. Securities Act of 1933 Rule 144(a)(3) identifies what sales result in restricted securities.
Additionally, while not technically falling within the definition of “restricted securities,” securities sold in Regulation Crowdfunding (Reg CF) offerings and Intrastate Securities offerings are also subject to restrictions on transfer. Securities offered and sold pursuant to a Regulation A offering, however, are not restricted securities.
Usually, restricted securities come with a certificate stamped with a “restrictive” legend. This legend states that the securities may not be resold unless their offer and sale is registered with the SEC or conducted pursuant to an exemption from registration.
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