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Restrictions on Transfer


Restrictions on transfer is a shareholder agreement clause that restricts a shareholder's freedom to sell his or her shares. Restricted securities are securities acquired in unregistered, private sales from the issuer or from an affiliate of the issuer. Investors typically receive restricted securities through private placement offerings, Regulation D offerings, employee stock benefit plans, as compensation for professional services, or in exchange for providing "seed money" or start-up capital to the company.