Unlike shares of public companies, securities purchased under Title III may not be transferred or sold during the first year of ownership unless they are transferred or sold:
- Back to the issuing company
- To an accredited investor, as defined by the SEC
- As part of an offering registered by the SEC
- To a member of your family, as defined by the SEC
- To a trust you control or to a trust created for the benefit of a member of your family
- As a result of your death or divorce
For the purposes of Title III, the SEC defines a “family member” as a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.
Beyond the initial 12-month period of restriction, there may be no market for the securities should you wish to sell them. Please bear in mind that startup investments are long-term investments that may take years to become liquid, if they do at all.