Restricted securities are shares (or other securities, eg loan notes) that are subject to certain restrictions such as risk of forfeiture if performance conditions are not met. These restrictions reduce the market value of the securities. If those restrictions are removed, the value of the securities goes up and the holder makes a notional gain and a real gain if the securities are sold.

The rules on restricted securities apply, where:

  • a person has a right or opportunity through their employer to acquire shares
  • those shares are subject to restrictions
  • those restrictions are lifted or varied or the securities are sold

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