Under SEC Rule 144, Control Securities include restricted stock held by an Affiliate of the Issuer. An Affiliate is a person, such as an executive officer, a member of the company’s board of directors or large shareholder, owning greater than 10%. These positions imply that the Affiliate is in a position of control with the issuer, and thus Affiliates are also sometimes called “Control Persons” when securities lawyers are analyzing restricted stock.
Control Person means that the Affiliate has the power to direct the management and policies of the Issuer. This power can be derived through the ownership of 10% or more of the Issuer’s voting securities, by some contract or agreement with the Issuer, or otherwise.
When a Shareholder in an OTC Bulletin Board or OTC Markets Issuer purchases stock from a Control Person or Affiliate, they receive restricted stock.