How do you remove a restrictive legend from securities? (2024)

How do you remove a restrictive legend from securities?

The transfer agent

will require an opinion letter from the issuer's counsel or from his or her own lawyer plus 144 papers completed by a broker—stating that the restricted legend can be removed.

What is a restrictive legend on stock certificate?

These securities generally bear a restrictive legend stating that the shares cannot be sold unless the resale transaction is covered under an effective registration statement, such as Form S-1, or the resale transaction does not require registration.

How do you remove a legend from Rule 144?

Only a transfer agent can remove a restrictive legend. But the transfer agent won't remove the legend unless you've obtained the consent of the issuer—usually in the form of an opinion letter from the issuer's counsel—that the restrictive legend can be removed.

How do shares become unrestricted?

If you own stock in a fully reporting non-shell company, you may be eligible to sell your stock if you have beneficially owned it for more than 6 months and less than one year. In order to do this, you will need to contact your broker/dealer and they will assist you in removing the restriction.

Can you transfer restricted securities?

Your restricted securities cannot be sold until the restrictive legend is removed. Your broker may also be able to guide you on completing and submitting your Form 144 when completing your sale transaction.

How do you remove the legend from a stock certificate?

In order to have the legend on a stock certificate removed, investors should contact the company's shareholder relations department to find out the details of the removal process. Following that, the company will send a confirmation authorizing its transfer agent to remove the legend.

What is legend removal?

The process of removing the restrictive legend from a stock certificate is done only to facilitate a public resale, and in no way alleviates an investor from complying with all aspects of Rule 144 at all times. RULE 144 LEGEND REMOVAL FORM.

What is the restrictive legend 144?

They typically bear a “restrictive” legend clearly stating that you may not resell them in the public marketplace unless the sale is exempt from the SEC's registration requirements. Rule 144 under the Securities Act of 1933 provides the most commonly used exemption for holders to sell restricted securities.

What is a restrictive legend under the 33 Act?

Restricted Stock Legend means, with respect to any Conversion Share, a legend substantially to the effect that the offer and sale of such Conversion Share have not been registered under the Securities Act and that such Conversion Share cannot be sold or otherwise transferred except pursuant to a transaction that is ...

What is the rule 144 for control securities?

Rule 144 provides an exemption and permits the public resale of restricted or control 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 any one time.

Who is required to file Form 144?

Form 144 is a mandatory SEC filing for those intending to sell restricted or control securities. Restricted securities stem from private sales, whereas control securities belong to affiliates such as directors or large shareholders.

Can you sell restricted securities?

Even if you've met all the conditions of Rule 144, you still cannot sell your restricted securities to the public until you've had the legend removed from the certificate. Only a transfer agent can remove a restrictive legend.

What is the 90 day holding period for Rule 144?

Under Rule 144(d)(1)(i), restricted securities acquired from an issuer that has been subject to Exchange Act reporting for at least 90 days before the sale (a “reporting issuer”) must be held for a minimum of six months.

When can you cash out restricted stock?

When a restricted stock vests, you can sell the shares you've received. It's important to consider your risk tolerance, asset allocation, and investing goals to decide on the best time to sell your restricted stock, just as you would with any other security in your portfolio since that is what it's now become.

What is the difference between RSU and restricted securities?

Restricted stock tends to have more conditions and restrictions than an RSU. For example, restricted stock may be forfeited if the executive doesn't deliver expected results, whereas RSUs usually only require the employee to stay with the company for a certain period of time before the shares are vested.

How much is an old stock certificate worth?

To determine the value of an old stock certificate, you will need to verify if the company is still active, the current (or most recent name) of the company and if its shares are still tradable.

What happens to unclaimed stock certificates?

California law requires corporations, businesses, associations, financial institutions, and insurance companies (referred to as “holders”) to annually report and deliver property to the State Controller's Office if there has been no activity on the account or contact with the owner for a specified period of time ( ...

What is a legend in a legal document?

These legends typically include a warning that the contents may be confidential, as well as a purported restriction that the contents may not be reproduced, used, or disclosed to others without permission of the owner.

Is restricted stock registered with SEC?

Restricted securities are shares that are not registered with the SEC, such as shares in a private company. They have a formal definition under the US securities laws.

What are restricted book entry shares?

Restricted Book Entry means a book entry on the Company's stock register maintained by its transfer agent and registrar, which book entry shall bear a notation regarding the Restrictions as set forth in Section 15(a) hereof and, if appropriate, a notation regarding securities law restrictions as set forth in Section 15 ...

What are restricted securities?

In general, restricted securities are acquired in a nonpublic transaction (private placement). Such securities are unregistered, can only be resold under certain conditions and usually bear a legend to that effect.

What is a Regulation S offering?

Regulation S gives U.S. and non-U.S. companies a way to raise capital for an overseas company while remaining compliant with United States securities law.

What is the difference between the 33 Act and the 34 Act?

The Securities Exchange Act of 1933 regulates newly issued securities, such as those being sold through an initial public offering. The Securities Exchange Act of 1934 regulates securities that are already being actively traded on the secondary market.

What is the rule 145 for securities?

As previously mentioned, SEC Rule 145 focuses on mergers, acquisitions, consolidations, and reclassifications of assets because these actions impact investment decisions. The rule is based on whether the securities holder has to vote on the exchange of existing securities for securities in another company.

What are Rule 701 restricted securities?

Rule 701 is a federal exemption under the Securities Act of 1933 that allows private companies to issue securities to employees and other service providers. This is especially useful when not all of your employees or service providers are accredited investors eligible for other securities exemptions like Regulation D.