What is the purpose of Rule 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.

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.

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 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.”

Does Rule 144 apply to registered shares?

In order to achieve these objectives, the law requires that securities are registered with the Securities and Exchange Commission before being sold. However, not all securities must be registered, which is where Rule 144 comes into play for restricted and control securities.

Is a 10% owner an affiliate?

Understanding Affiliated Persons In connection with a securities registration, the Securities and Exchange Commission (SEC) expands the definition of an affiliated person quite broadly. Form S-11 defines an affiliated person to also include: Persons owning 10% or more of any class of a company’s stock.

Does Rule 144 apply to private companies?

Of the five requirements contained in Rule 144, if the holder of the company’s securities is a non-affiliate and the company is a non-reporting company, then only the holding period condition must be met to satisfy Rule 144.

Who is an affiliate under Rule 144?

Is a family member an affiliate?

Family Affiliate means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of any Person.

Does Rule 144 apply to spacs?

However, Rule 144(i) provides that the rule is not available for a SPAC or other shell company, even after its de-SPAC transaction, until one year after it ceased to be a shell company and has filed with the SEC information that would satisfy the requirements of Form 10 or, for foreign issuers, Form 20-F (“Form 10 …

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