Restricted Corporate Stock

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 1244 stock. Restricted stock should not be issued except under the supervision of an experienced attorney.

Non-Voting Stock

 

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