Who can purchase Rule 144 securities?

Rule 144(f) allows securities to be sold directly to market makers, as that term is defined in Section 3(a)(38) of the Exchange Act. The market maker exception will apply only if the market-making firm purchases the Rule 144 securities as principal.

Does Rule 144 apply to non affiliates?

A non-affiliate is not required to comply with the manner of sale requirement, volume limitation or Form 144 filing obligation of Rule 144 in connection with the sale of restricted stock. Those requirements apply only to sales by affiliates.

Does Rule 144 apply to private companies?

Rule 144 does not apply to private transactions, including sales, gifts, estate distributions and pledges, but does apply to the purchaser, donee, beneficiary and pledgee, when they sell the stock into the public market.

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 are the conditions of Rule 144?

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 …

What is an affiliate of the issuer?

(1) An affiliate of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer.

Is a 10% owner an affiliate?

Understanding Affiliated Persons Form S-11 defines an affiliated person to also include: Persons owning 10% or more of any class of a company’s stock. Any person who is a promoter of the company and connected with the company in any capacity. Any principal underwriter of the securities being registered.

What is the purpose of a Rule 144 filing?

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 restriction?

What is Rule 144 restricted?

What Is Rule 144? Rule 144 is a regulation enforced by the U.S. Securities and Exchange Commission (SEC) that sets the conditions under which restricted, unregistered, and control securities can be sold or resold.

Can a natural person be an affiliate?

“Affiliate” means with respect to any Person, any Person that directly or indirectly controls, is controlled by or is under common control with such Person.

Is a wife an affiliate?

Affiliate refers to a person or an organization officially attached to a larger while partner refers to a spouse, lover, a member of a business partnership, one of a pair/or team in a sport or game, or either of two people dancing together.

How do I sell unregistered stock?

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.

What’s the difference between affiliate and subsidiary?

Key Takeaways. A subsidiary is a company whose parent company is a majority shareholder that owns more than 50% of all the subsidiary company’s shares. An affiliate is used to describe a company with a parent company that possesses 20 to 50% ownership of the affiliate.

Does Rule 144 apply to non-reporting companies?

Also voluntary filers (e.g. companies that did not file a registration statement on Form 10 or Form 8-A) are also considered non-reporting companies. This blog post discusses Rule 144 as it applies to reporting companies only.

What is Rule 144 (a) (3)?

Rule 144(a)(3) identifies what sales produce restricted securities. Control securities are those held by an affiliate of the issuing company. An affiliate is a person, such as an executive officer, a director or large shareholder, in a relationship of control with the issuer.

How many Form 144 filings are not subject to Exchange Act reporting?

As noted above, the Commission staff estimates that approximately one percent of the Form 144 filings made during the 2019 calendar year related to the resale of securities of issuers that are not subject to Exchange Act reporting. [ 45]

Are affiliates of an issuer under Rule 144 insiders under Section 16?

Many affiliates of an issuer under Rule 144 are also insiders of that issuer under Section 16 of the Exchange Act. Affiliates selling securities under Rule 144 often are required to file a Form 4 within two business days after they file a Form 144 to report information regarding the same sale of securities.