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Restricted Securities

Restricted securities are securities usually received in an unregistered, private sale from the issuing company or from an affiliate of the issuer. Investors can receive restricted securities through private placement offerings, Regulation D offerings and employee stock benefit plan. They can also be compensated for professional services or in exchange for providing “seed money” or start-up capital to the company. There are specific restrictions on when and how these securities may be sold.

Related Terms: Lock Up agreement, Mandatory Conversion, Equity financing

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