Restricted Stock Agreement

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Restricted Stock Agreement

A restricted stock agreement is a written document entered into by insiders where they are given restricted stocks after any merger and acquisition deal or underwriting activity, that is, there is some kind of sales restrictions and certain regulations to be followed by the insiders keeping with the terms mentioned in the Section 1244 of the Internal Revenue Code. Restricted stocks have to be registered with the US Securities and Exchange Commission (SEC) and can be traded only in accordance to the rules of the SEC.

Such restrictions are put on sales of stocks in order to stop them from prematurely selling those stocks which may be harmful for the company and the price of the stock. Restricted stocks are those stocks which are not totally transferable till specific conditions are met by the insiders. These stocks are often granted by companies to their employees, especially high-level executives, as part of the compensation package, and it also has good tax benefits.

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Sample Restricted Stock Agreement

Restricted Stock Agreement

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