Securities Law, NYSE, NASDAQ & OTC Markets Listings & Compliance
Selling Private Placement Shares on Forge Global, Nasdaq Private Market, or Illiquidx
Company shareholders, whether employees, founders, or early investors, are increasingly looking to secondary marketplaces like Forge Global, Nasdaq Private Market (NPM), and Illiquidx to sell the shares they purchase in exempt offerings such as Regulation D. We often get asked whether restricted stock acquired in a private placement can be sold on these platforms.
The short answer is: yes, it may be possible—but only if several legal, contractual, and practical requirements are met.
What Is Restricted Stock?
“Restricted stock” refers to securities that were not sold in a registered offering and are therefore subject to resale limitations under U.S. securities laws. These securities typically bear a restrictive legend on their certificates (or book-entry records) and cannot be freely traded until certain conditions are satisfied.
Restricted securities are commonly acquired by:
- Employees through equity incentive plans
- Founders and insiders at company formation
- Investors in private placements under Regulation D, Rule 506(b) or 506(c)
- Non-employees who participate in early rounds of financing
Legal Framework: Rule 144 and Other Resale Exemptions
The Securities Act of 1933 requires that securities sold in the U.S. be registered with the SEC unless an exemption applies. For resales of restricted stock, the most common exemption is SEC Rule 144.
Rule 144 imposes conditions such as:
- Holding period: 6 months (for reporting issuers) or 12 months (for non-reporting issuers)
- Current public information: The issuer must make adequate disclosures available
- Volume limitations: For affiliates and insiders, sales are capped at specific percentages of trading volume
- Manner of sale requirements: Broker transactions or directly with market makers
- Form 144 filing: Required for affiliates in some instances
If Rule 144 is not available, other exemptions such as Rule 144A (resales to qualified institutional buyers) or private resale exemptions may apply. In any case, the restrictive legend must usually be removed by company counsel or transfer agent before a trade can be closed.
Contractual Restrictions: The Company Must Approve
Even if securities laws allow a resale, the company’s governing documents or stock purchase agreements often impose additional restrictions, such as:
- Right of first refusal (ROFR): The Company or other investors get the first chance to buy
- Board or company consent requirements
- Lock-up agreements tied to IPOs or financing rounds
- Transfer limitations in the bylaws or shareholders’ agreements
Without company consent, platforms like Forge or Nasdaq Private Market will not process the transaction.
Platform Considerations: Forge Global, Nasdaq Private Market, Illiquidx
Forge Global
Forge is one of the most accessible private-market platforms. It allows shareholders, including non-employees such as early investors, to list restricted shares for sale.
Sellers must:
- Prove ownership of shares
- Satisfy Forge’s minimum trade sizes (often $100,000+)
- Secure company approval and legal clearance for transfer
Nasdaq Private Market (NPM)
NPM specializes in facilitating structured liquidity programs, tender offers, and block trades. While widely used by employees and companies running formal secondary programs, non-employees may also be eligible if the company consents.
Trades often require:
- Company cooperation
- Verified ownership documentation
- Compliance with Rule 144 or other exemptions
Illiquidx
Illiquidx is a smaller platform with less public information available. While it markets itself as a liquidity solution for illiquid assets, eligibility depends heavily on whether the company is supported, what agreements apply, and whether legal transfer restrictions can be cleared.
Practical Checklist Before You Sell
If you are a non-employee investor holding restricted stock from a private placement and want to sell, take these steps:
- Review your agreements: Check your subscription or stock purchase agreement for transfer restrictions.
- Gather your paperwork: Compile your paperwork, including proof of payment for the shares and your fully executed subscription or stock purchase agreement.
- Confirm company policy: Contact the company’s legal or equity administration team.
- Identify resale exemption: Determine if Rule 144 applies and whether your holding period is satisfied.
- Obtain legend removal: Work with company counsel and the transfer agent to clear the legend.
- Select a platform: Confirm whether your company is supported on Forge, NPM, or Illiquidx.
- Check buyer demand: Even if permitted, trades will only close if there is interest at your price.
Bottom Line
Non-employee investors who acquired restricted stock in a private placement may be able to sell on platforms like Forge Global, Nasdaq Private Market, or Illiquidx—but only if:
- Securities law exemptions (e.g., Rule 144) are satisfied
- Company approvals and contractual conditions are met
- The platform supports your company’s shares
- A willing buyer exists
Without these pieces in place, restricted stock will be difficult to sell.
If you have questions about this blog post or would like to speak with a Securities Attorney, Hamilton & Associates Law Group, P.A. is ready to help. Our Founder, Brenda Hamilton, is a nationally known and recognized securities attorney with over two decades of experience assisting issuers worldwide with going public on the Nasdaq, NYSE, and OTC Markets. Since 1998, Ms. Hamilton has been a leading voice in corporate and securities law, representing both domestic and international clients across diverse industries and jurisdictions. Whether you are taking your company public, raising capital, navigating regulatory challenges, or entering new markets, Brenda Hamilton and her team deliver the experience, strategic insight, and results-driven representation you need to succeed.
To speak with a Securities Attorney, please contact Brenda Hamilton at 200 E Palmetto Rd, Suite 103, Boca Raton, Florida, (561) 416-8956, or by email at [email protected].
Hamilton & Associates | Securities Attorneys
Brenda Hamilton, Securities Attorney
200 E Palmetto Rd, Suite 103
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com
