Can I Invest In A Start-Up Enterprise Or Emerging Growth Business And Receive “Freely Tradable” Stock? If Not, What Are The Likely Limitations On The Liquidity Of My Investment?
Most of the securities issued by early-stage companies in private placement offerings are likely to be deemed “restricted securities” under Rule 144 of the Securities Act. Investors who acquire shares of stock that are considered restricted securities will not be able to sell their shares until the expiration of a minimum one-year holding period. Also, an investor seeking to sell shares of stock subject to Rule 144 must comply with certain volume sale limitations under the rule, and the sale cannot be consummated unless the issuer is in compliance with Rule 144’s publicly available information requirements.
