Legal Definitions - restricted stock

Restricted stock is a type of security that represents ownership in a company. It is called "restricted" because there are limitations on when and how the stock can be sold or transferred.

For example, an employee may receive restricted stock as part of their compensation package. They cannot sell or transfer the stock until certain conditions are met, such as a certain amount of time passing or the company achieving certain performance goals.

Another example is when a company issues restricted stock to investors. The investors cannot sell or transfer the stock until the company goes public or is acquired by another company.

Restricted stock is different from regular stock because it comes with restrictions on when and how it can be sold or transferred. This can make it more valuable or less valuable than regular stock, depending on the circumstances.