Restricted securities are securities that are subject to transfer limitations. They are commonly used in private offerings made under an exemption to the registration requirements for sales of securities promulgated by the Securities and Exchange Commission (SEC). Certain exemptions require that the securities not be resold in the two-year period following the sale. The sale agreements — such as the stock purchase agreements or subscription agreements — and corporate documents describing such securities typically provide that the securities cannot be resold in the prohibited period following the sale, and are therefore deemed to be restricted. The term restricted securities is sometimes applied to shares issued pursuant to a vesting scheme. Shares issued as incentive compensation or to initial founders the company desires to have receive shares over the course of several years can provide that the shares fully vest and become the unrestricted property of the new equity holder pursuant to a schedule. Prior to vesting, the shares are usually subject to a repurchase right allowing the company to repurchase any unvested shares if the new equity leaves the company. The unvested shares are often referred to as restricted securities and the new equity holders are not permitted to transfer unvested shares.