How to Lift Restrictions on a Stock Certificate

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Getting the restriction removed isn't difficult, but it can take time.
Getting the restriction removed isn't difficult, but it can take time. (Image: calendar image by Szymon Apanowicz from Fotolia.com)

The Securities & Exchange Commission allows for the public sale or transfer of restricted securities under Rule 144. Only the company's transfer agent can remove the restrictive legend on your stock certificate, but your broker can help you with this process, providing the forms you will need to complete. Be prepared for this process to take several weeks, assuming you have concluded the required waiting period for holding your shares.

Things You'll Need

  • Rule 144 Seller's Representation Letter from your broker
  • SEC Form 144
  • Irrevocable Stock Power form from your broker

Contact your brokerage firm and request the paperwork required to remove the restrictive legend on your stock certificate.

Confirm with your brokerage firm that it will send you, at a minimum, the Rule 144 Seller's Representation Letter, the SEC Form 144 and a Stock Power form. Your firm may also require additional forms.

Determine whether your status is "affiliate" or "non-affiliate" of the company and complete the Seller's Representation letter accordingly.

Contact your company or your company's transfer agent to obtain the appropriate IRS Identification Number and SEC File Number. You will need this information in order to complete the SEC Form 144.

Complete and sign your brokerage firm's Irrevocable Stock Power form. This form allows your broker to negotiate the certificate on your behalf, but it does not give your broker ownership of the shares.

Make and keep a copy of your completed forms and your stock certificate.

Be sure to keep a copy of your certificate and completed forms.
Be sure to keep a copy of your certificate and completed forms. (Image: copy machine image by Mat Hayward from Fotolia.com)

Contact your brokerage firm upon its receipt of your package and ensure you completed all forms correctly. If it sees a problem, you can likely correct it without its having to mail back the entire package.

Follow up with the issuer's transfer agent if the restriction on your certificate has not been removed within six weeks of your sending in your paperwork. Your broker must depend on the transfer agent to complete this step.

Tips & Warnings

  • You can deposit your certificate into your brokerage account at any time, without removing the restriction, while you wait for the holding period to expire.
  • Employ a mailing or delivery service that will allow you to track and insure your package. Although you can replace a lost certificate, paying a bit extra to ensure delivery could save you time and hassle.
  • Once your certificate has been deposited, you should be able to see the shares online, along with a notation that they are restricted.
  • Be prepared to wait several weeks from the time you mail in your certificate to the time by which the restrictive legend is removed.
  • You might be able to sell your shares before the restriction is removed, but your brokerage firm will likely hold your sales proceeds until the process is completed.

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