The Five Conditions Of Resale For Rule 144 Securities

by | Jan 5, 2018 | Financial Services

If you have restricted, control, or unregistered securities and want to sell or resell them, you must meet five particular conditions. The prescribed holding period has to be met first. For public companies, that is six months and begins from the moment a holder bought and paid for the security. If a company doesn’t have to file with the SEC, the holding period is set at one year. Hold periods apply to restricted securities primarily, as resale of a controlled security has other requirements attached to it under Rule 144.

Public Information And Affiliates

The second condition under Rule 144 is that there has to be enough current information made public to investors. This can include information about directors and officers, as well as historical financial statements, business descriptions, and more.

Along with this, sellers who are affiliated with the company cannot resell more than one percent of the total shares in a three-month period. If your company’s stocks are listed on the stock exchange, the average of the previous four-week volume or one percent of the total outstanding shares can be cold, depending on which is greater. However, with over-the-counter stocks, the one-percent rules are the only ones that apply.

Normal Trading Conditions And Extra SEC Requirements

The fourth condition is that all standard trading conditions applying to the trade have to be met. For one, brokers cannot solicit to buy orders and cannot receive a commission that more than their regular rate. Likewise, the SEC does require that affiliated sellers file a proposed sale notice if the value exceeds $50,000 during a three-month period or more than 5,000 share shares proposed.

Rule 144 can be a difficult one to understand, and if you need more help, you aren’t alone. Visit Colonial Stock Transfer Company, Inc. today to learn more and get advice from a professional.

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