What are the conditions of Rule 144?

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.

What is a Rule 144 exemption?

Rule 144 is the most common exemption that allows the resale of unregistered securities in the public stock market, which is otherwise illegal in the U.S. The regulation gives a specific set of conditions that a shareholder must meet in order to sell unregistered, “restricted,” or “controlled” securities in the public …

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.

Who does SEC Rule 144 apply to?

Five Conditions for Resale of Rule 144 Securities For a company that does not have to make filings with the SEC, the holding period is one year. The holding period requirements apply primarily to restricted securities, while resale of control securities is subject to the other requirements under Rule 144.

How do I sell unregistered shares?

Selling unregistered shares is typically considered a felony, but there are exceptions to this rule. SEC Rule 144 lays out the conditions under which unregistered shares may be sold: They must be held for a prescribed period. There must be adequate public information about the security’s historical performance.

Does Rule 144 apply to SPACs?

Although business combination related shell companies are excluded from the Rule 144(i) limitation, SPACs are not business combination related shell companies.

What is a Rule 144 opinion letter?

Securities counsel are frequently asked to deliver opinions stating that certain securityholders may sell restricted securities without registration under the Securities Act of 1933 (Securities Act) in reliance on Rule 144 under the Securities Act. The opinions are often referred to as Rule 144 opinions.

Does Rule 144 apply to private sales?

If the holder of the securities is an affiliate, the seller must file a notice with the SEC on Form 144 if the sale involves more than 5,000 shares or the aggregate dollar amount is greater than $50,000 in any three-month period.

What is the difference between a SPAC and de-SPAC?

A de-SPAC transaction is a company merger of the Special Purchase Acquisition Company (SPAC), the buying entity, and a target private business. By SEC proxy rules, as a public company the SPAC must obtain shareholder approval of an intended merger.

Why do companies go to SPAC?

SPACs offer target companies specific advantages over other forms of funding and liquidity. Compared with traditional IPOs, SPACs often provide higher valuations, less dilution, greater speed to capital, more certainty and transparency, lower fees, and fewer regulatory demands.

What is a 144 filing?

Form 144 is a notice of intent to sell form that must be filed with the Securities and Exchange Commission (SEC) when a person who was granted shares plans to sell their unregistered shares.

What is a stock opinion letter?

Legal opinion letters are issued to transfer agents on behalf of holders of restricted stock seeking to sell the stock freely in the public markets. Transfer agents typically require a lawyer’s opinion explaining the legal basis for lifting the restriction on the stock and allowing it to be freely traded.

Who does Rule 144 apply to?

Rule 144 applies if you are: a non-affiliate shareholder who wants to sell their restricted securities an affiliate of the issuing company who wants to sell their securities (whether they are restricted or “free trading”) into the public market Rule 144 does not apply to:

Does Rule 144 apply to restricted stock?

Rule 144 applies to the resale of any stock into the public market –. which is restricted stock, which is sold by a controlling person (“affiliate”) of the issuing company into the public securities market, whether or not it is restricted stock.

What is a non underwriter under Rule 144?

§ 230.144 Persons deemed not to be engaged in a distribution and therefore not underwriters. Certain basic principles are essential to an understanding of the registration requirements in the Securities Act of 1933 (the Act or the Securities Act) and the purposes underlying Rule 144:

What are the conditions of a Rule 144 sale?

Conditions of Rule 144. To sell your restricted or control securities to the public under Rule 144, you must meet five conditions. Note that although Rule 144 is not the only way to sell such securities, it is the most commonly used and provides a “safe harbor” for sellers.