Restricted stock refers to shares in a corporation that are usually issued to executives, directors, and/or corporate affiliates that is non-transferable except in compliance with certain restrictions. The restrictions are designed to eliminate premature selling that might adversely affect the company. Sale or transfer of shares are usually limited to a defined number of shares over a specified period of time. Restricted stock may also vest over a period of time conditioned on the person continuing in his or her role for a defined period of time. Restricted stock is also commonly called letter stock and section 144 stock. Restricted stock should not be issued except under the supervision of an experienced attorney.

SEC Rule 144 provides an exemption and permits the public resale of restricted securities if a number of conditions are met, including how long the securities are held, the way in which they are sold , and the amount that can be sold at anyone time.