Restricted share

A restricted share is stock that cannot be sold, due to a limitation associated with that specific share. For example, an agreement between the issuer of shares and an investor may stipulate that the investor cannot sell the shares for a period of three years. Or, shares that have not been registered with the Securities and Exchange Commission cannot be sold by the investor, unless a stock sale exemption (such as Regulation A or Rule 144) applies.

Restricted shares can also refer to stock that has been awarded to an employee, but which cannot be sold until certain conditions have been met, such as continuing to work for the employer for several additional years.

Related Courses

Accounting for Stock-Based Compensation 
Corporate Finance