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Rule 144(d)

Rule 144 – A Deep Dive – Part 2 – Definitions

Last week I published a high-level review of Rule 144 – see HERE.  This week, I will begin the deep dive discussion of the numerous intricacies of this very important rule, starting with definitions.

Rule 144 Definitions

Rule 144 only has four definitions, but there is a lot to discuss on each of these definitions.

Affiliate

Rule 144 sets forth different conditions for sellers that are “affiliates” or a person that has been an affiliate in the past 90 days then for those that are non-affiliates.  Sales by affiliates always require that a company have current public information, are subject to volume limitations (the drip rules), are subject to manner of sale requirements (sales must be made through a broker-dealer) and require the filing of a Form 144.  Sales by non-affiliates only require current public information when effectuated after six months but prior to a one year holding period and are never subject to the volume limitations,

Rule 144 – A Deep Dive – Part 1

It has been ten years since I summarized Rule 144 (see HERE), and at that time it was a very high level overview, not a deep dive into the numerous intricacies of the rules application.  Rule 144 is likely the most oft used rule by founders, private investors, early investors, affiliates and insiders, and merger/reverse merger participants, and as such deserves some focus.

I will start this blog series with a high-level overview of Rule 144 and then unpack the numerous individual requirements in the following editions.

Rule 144 – Basic Overview

As I repeat again and again, every offer or sale of securities must either be registered or have an available exemption from registration.  Rule 144 promulgated under the Securities Act of 1933 (“Securities Act”) sets forth certain requirements for the use of Section 4(a)(1) for the sale of restricted or control securities by an existing shareholder.  Control securities are those securities held by an affiliate of

SEC Proposes Amendments To Rule 144

I’ve been at this for a long time and although some things do not change, the securities industry has been a roller coaster of change from rule amendments to guidance, to interpretation, and nuances big and small that can have tidal wave effects for market participants.  On December 22, 2020, the SEC proposed amendments to Rule 144 which would eliminate tacking of a holding period upon the conversion or exchange of a market adjustable security that is not traded on a national securities exchange.  The proposed rule also updates the Form 144 filing requirements to mandate electronic filings, eliminate the requirement to file a Form 144 with respect to sales of securities issued by companies that are not subject to Exchange Act reporting, and amend the Form 144 filing deadline to coincide with the Form 4 filing deadline.

The last amendments to Rule 144 were in 2008 reducing the holding periods to six months for reporting issuers and one year

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