What is Rule 144 of the Securities Act?
Rule 144 provides an exemption and permits the public resale of restricted or control securities if a number of conditions are met, including how long the securities are held, the way in which they are sold, and the amount that can be sold at any one time.
Who Does Rule 144 apply to?
Rule 144 applies to the sale into the public securities market of restricted stock by anyone and of unrestricted stock sold by a controlling person (“affiliate”) of an issuing company. Sales into the public market involve a brokerage firm and are not face-to-face sales negotiated between a seller and a buyer.
Who is considered an affiliate under Rule 144?
Rule 144 at (a)(1) defines an “affiliate” of an issuing company as a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer.”
What is a Rule 147 offering?
Rule 147 is a rule that can be used by a company to raise funds without actually registering with the Securities and Exchange Commission (SEC).
What is a Rule 145 transaction?
Rule 145 is an SEC rule that allows companies to sell certain securities without first having to register the securities with the SEC. This specifically refers to stocks that an investor has received because of a merger, acquisition, or reclassification.
Does Rule 144 apply to stock options?
SEC Rule 144 governs the sale of restricted and controlled securities including the shares resulting from your private company stock options.
When can you sell under 144?
If you are not (and have not been) an affiliate of the issuing company, and you have held the securities for more than 12 months, you can sell the securities in the public market without restrictions or needing to meet the conditions of Rule 144.
Is a 10% owner an affiliate?
For purposes of this calculation, the Company does not currently consider any of its shareholders who are not directors or executive officers of the Company, including any such shareholders owning 10% or more of the Company’s common stock, to be “affiliates” of the Company.
What is a Reg D offering?
A Regulation D offering is intended to make access to the capital markets possible for small companies that could not otherwise bear the costs of a normal SEC registration. Reg D may also refer to an investment strategy, mostly associated with hedge funds, based upon the same regulation.
What is the difference between Rule 144 and 144A?
Rule 144A, which limits resales only to QIBs, and Rule 144A is only available in respect of certain securities. Rule 144, pursuant to which resales can only be made in compliance with the holding period, volume and manner of sale requirements.
Does Rule 144 apply to non affiliates?
A non-affiliate of a non-reporting issuer must hold the securities for one year before any public resale. After one year, a non-affiliate may freely resell such securities without regard to any of the Rule 144 conditions.
Does Rule 144 apply to registered shares?
No. “Free trading” shares do not exist under Rule 144. Rule 144 is a transactional exemption that allows the sale of restricted stock in the public marketplace once certain conditions are met. Meeting the conditions does not make the securities “free trading.”