Rule 144
Rule 144 provides a safe harbor for selling restricted securities and control securities, specifying holding periods, volume limitations, and filing requirements for legally reselling these securities.
Exam Tip
Rule 144 = resale of restricted/control securities. 6 months (reporting) or 1 year (non-reporting) holding period. Affiliates always have volume limits!
What is Rule 144?
Rule 144 provides conditions under which restricted securities (obtained through private placements) and control securities (held by affiliates) can be sold in the public market without registration.
Who Rule 144 Applies To
| Category | Definition |
|---|---|
| Restricted Securities | Acquired in unregistered offerings |
| Control Securities | Held by company affiliates/insiders |
| Affiliates | Officers, directors, 10%+ shareholders |
Rule 144 Requirements
| Requirement | Affiliates | Non-Affiliates |
|---|---|---|
| Holding Period | 6 months (reporting) / 1 year (non-reporting) | Same |
| Current Information | Required | Not required after 1 year |
| Volume Limitations | Yes | No (after holding period) |
| Ordinary Brokerage | Yes | No (after 1 year) |
| Form 144 Filing | Yes (if over $50K or 5,000 shares) | No (after 1 year) |
Holding Period
| Issuer Status | Minimum Hold |
|---|---|
| SEC Reporting Company | 6 months |
| Non-Reporting Company | 1 year |
Volume Limitations (Affiliates)
In any 3-month period:
- Greater of: 1% of outstanding shares OR
- Average weekly trading volume (4 weeks prior)
Form 144 Filing
| Requirement | Details |
|---|---|
| When Required | If selling > $50,000 or > 5,000 shares |
| Filed With | SEC |
| Timing | Concurrent with sale |
| Validity | Good for 90 days |
Current Public Information
| For Reporting | For Non-Reporting |
|---|---|
| SEC filings current | Basic information available |
| Forms 10-K, 10-Q, 8-K | Company nature, officers, financials |
Rule 144 Timeline Summary
| Timeframe | Non-Affiliate | Affiliate |
|---|---|---|
| 0-6 months | Cannot sell | Cannot sell |
| 6-12 months | Volume/manner limits | Volume/manner limits |
| After 1 year | Freely sell | Volume/manner limits still apply |
Study This Term In
Related Terms
Private Placement
SecuritiesA private placement is the sale of securities directly to a limited number of sophisticated investors without a public offering, typically exempt from SEC registration under Regulation D.
Insider Trading
SecuritiesInsider trading is the illegal practice of buying or selling securities based on material, non-public information, or tipping others to trade on such information. It violates securities laws and can result in civil and criminal penalties.