I am participating in my company's ESPP. My share lots have two restrictions:

  • A sales restriction of 18 months, which is what it sounds like: I can't sell the shares until I've held them for 18 months.
  • A transfer restriction of 24 months.

So, what is a transfer restriction? I thought it meant that I can't transfer my shares to another broker. This seems pointless, since once I can sell my shares I can effectively transfer them to another broker, by transferring the cash. The only downside is the minor transaction fees. But maybe it means something else.

Here's the screenshot of what I see when I try to transfer a lot. I have no idea what "share issuance" means.

This is via Computershare, for what it's worth.

Hopefully the gist of my question makes sense.

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  • The second-to-last paragraph of this document talks of transferring out of the ESPP to a brokerage account (kind of implying that they're originally not in a [normal] brokerage account) but gives no idea why that restriction would be longer/different than the restriction on selling. – TripeHound Jul 12 '17 at 8:34
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    ...This web page links to a PDF of a "sample ESPP transaction" that contains "The shares you have acquired are subject to a "Restriction Period" in accordance with your company's stock plan rules. Please see your plan documents for more information". – TripeHound Jul 12 '17 at 8:39

I believe your definition of a transfer is the right one.

Your employer has an ESPP plan administered by Computershare. Amongst other things, one thing they might do (depending on your plan) is track your profit or loss on the shares for the employer's tax purposes. (The employer gets a tax deduction for the wage income recognition they can do triggered by you selling your ESPP shares.) The accounting of that is different on transfers. Thus they have different holding periods.

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