Restricted stock certificates customarily bear a legend identifying them as restricted. The main purpose of a restrictive legend is to prevent you from transferring ownership in violation of securities laws or contractual agreements. Certificates bearing a restrictive legend normally will not transfer until the securities represented by your certificates have either: been sold in accordance with the applicable regulatory or contractual restrictions, or are no longer subject to regulatory or contractual restrictions. The absence of a legend does not mean that your shares are unrestricted.

Rule 144

Rule 144 has been recently modified by the Securities and Exchange Commission.  The new rules eliminated the 144(k) exemptions and reduced the holding periods for fully reporting Issuers of Non-shell companies.  Click on the following link to download a PDF of the final rule: 144 final rule 33-8869fr 2-15-2008.

6-12 Months Holding Period

If you own stock in one of these companies, you may be eligible to sell your stock if you have beneficially owned it for 6 months or more.   In this case, you will need to contact your broker/dealer directly to make any sale of securities that you have owned for more than 6 months and less than 1 year. Your broker will assist in removing the restriction.

12+ Months Holding Period

You may transfer directly with Colonial Stock Transfer, using our Sellers Rep Letter if you have owned your stock for more than 12 months.  You may be required to obtain a legal opinion to make a transfer in a non-reporting company, if there is an exemption available under the new rule. 

To remove your 144 restriction on stock that has been held 12 months or longer, please send in the following:

1. Submit the original certificate with the Transfer Instruction Letter.
2. Submit a Sellers Rep Letter.

3. Submit a legal opinion, if required.
4. Enclose transfer fees of $40 per certificate issued and $2 per certificate cancelled (if cancelling more than 5 certificates) plus restricted legend removal legal fees of $60 for the 1st certificate and $20 for each additional certificate (in the same name).

5. Submit return shipment information, including applicable fees as specified in the transfer instruction letter. See More

Registration Statement (For non-shell companies only)

Some companies will file a registration statement with the SEC that will enable a shareholder to sell restricted stock, provided that any unsold shares be issued back into the shareholders name with the restriction. Normally the company will inform all shareholders that are affected by the registration statement, but it may be worth the time to call the company's investor relations department directly to find out if a registration statement has been filed, or will be filed.

If a registration statement has been filed with the SEC for your shares, and is still "effective", then please send the following in order to free up the shares once the shares have been sold:

1. Submit the certificate with the Transfer Instruction Letter and an acceptable Medallion Signature Guarantee.
2. Submit a confirmation of sale letter signed by the shareholder or brokerage firm, attesting that the shares have been sold pursuant to the prospectus delivery requirements.
3. Attach a copy of the registration statement that list your shares.
4. Enclose transfer fees of $40 per certificate issued and $2 per certificate cancelled (if cancelling more than 5 certificates) plus restricted legend removal legal fees of $60 for the 1st certificate and $20 for each additional certificate (in the same name).
5. Submit return shipment information, including applicable fees as specified in the transfer instruction letter. See More