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Overview
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 Rule
144 conditions
- If a seller satisfies the applicable conditions
to Rule 144,
the seller is deemed not to be an underwriter,
so that the Section
4(1) exemption is available for the resale of the securities
- Application of these conditions depends on:
- Depending on these factors, the following
conditions
may apply:
- The selling securityholder may also be required
to file a Form 144 per
Rule 144(h)
See
Summary Table above
SEC
summaries
Rule
145
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2008 Changes
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Rule
144(b) is being revised
- To add distinctions on whether certain conditions
to use Rule 144 apply, depending on
- Whether the securityholder is an affiliate
of the issuer
- Whether the issuer is an Exchange Act reporting
company
- Whether the securities are equity securities or
debt securities
New
Rule 144(i) is being added
- Codifies SEC position that certain shell
companies are ineligible for Rule 144
Rule
144(k) is being eliminated
- Rule exempted non-affiliates from specified Rule
144 conditions
- Conditions for non-affiliates are now specified
by
Rule 144(b)(i)
Changes
are effective 2.15.08
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Rules Effective February 15, 2008
144(b)(1) Non-Affiliate
Conditions
- Conditions to be met. Subject to
paragraph (i) of this section, the
following conditions must be met:
(1) Non-Affiliates.
(i) If the issuer of the securities is, and has been for a period of at
least 90 days immediately before the sale, subject to the reporting requirements
of section 13 or 15(d) of the Securities Exchange Act of 1934 (the Exchange
Act), any person who is not an affiliate of the issuer at the time of the sale,
and has not been an affiliate during the preceding three months, who sells
restricted securities of the issuer for his or her own account shall be deemed
not to be an underwriter of those securities within the meaning of section
2(a)(11) of the Act if all of the conditions of paragraphs (c)(1) and (d) of
this section are met. The requirements of paragraph (c)(1) of this section shall
not apply to restricted securities sold for the account of a person who is not
an affiliate of the issuer at the time of the sale and has not been an affiliate
during the preceding three months, provided a period of one year has elapsed
since the later of the date the securities were acquired from the issuer or from
an affiliate of the issuer.
(ii) If the issuer of the securities is not, or has not been for a period
of at least 90 days immediately before the sale, subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act, any person who is not
an affiliate of the issuer at the time of the sale, and has not been an
affiliate during the preceding three months, who sells restricted securities of
the issuer for his or her own account shall be deemed not to be an underwriter
of those securities within the meaning of section 2(a)(11) of the Act if the
condition of paragraph (d) of this section is met. |
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Official
source
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144(b)(2) Affiliate
Conditions
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144(b)(2)
- Conditions to be met. Subject to
paragraph (i) of this section, the
following conditions must be met:
....
(2) Affiliates or persons selling on behalf of affiliates. Any affiliate
of the issuer, or any person who was an affiliate at any time during the 90 days
immediately before the sale, who sells restricted securities, or any person who
sells restricted or any other securities for the account of an affiliate of the
issuer of such securities, or any person who sells restricted or any other
securities for the account of a person who was an affiliate at any time during
the 90 days immediately before the sale, shall be deemed not to be an
underwriter of those securities within the meaning of section 2(a)(11) of the
Act if all of the conditions of this section are met. |
|
Official
source
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144(i) Shell companies ineligible
- Unavailability to securities of issuers with no or nominal operations
and no or nominal non-cash assets.
(1) This section is not available for the resale of securities initially issued
by an issuer defined below:
(i) An issuer, other than a business combination related shell company, as
defined in 230.405, or an asset-backed issuer, as defined in Item 1101(b) of
Regulation AB (229.1101(b) of this chapter), that has:
(A) No or nominal operations; and
(B) Either:
(1) No or nominal assets;
(2) Assets consisting solely of cash and cash equivalents; or
(3) Assets consisting of any amount of cash and cash equivalents and nominal
other assets; or
(ii) An issuer that has been at any time previously an issuer described in
paragraph (i)(1)(i).
(2) Notwithstanding paragraph (i)(1), if the issuer of the securities previously
had been an issuer described in paragraph (i)(1)(i) but has ceased to be an
issuer described in paragraph (i)(1)(i); is subject to the reporting
requirements of section 13 or 15(d) of the Exchange Act; has filed all reports
and other materials required to be filed by section 13 or 15(d) of the Exchange
Act, as applicable, during the preceding 12 months (or for such shorter period
that the issuer was required to file such reports and materials), other than
Form 8-K reports (249.308 of this chapter); and has filed current "Form 10
information" with the Commission reflecting its status as an entity that is no
longer an issuer described in paragraph (i)(1)(i), then those securities may be
sold subject to the requirements of this section after one year has elapsed from
the date that the issuer filed "Form 10 information" with the Commission.
(3) The term "Form 10 information" means the information that is required by
Form 10 or Form 20-F (249.210 or 249.220f of this chapter), as applicable to
the issuer of the securities, to register under the Exchange Act each class of
securities being sold under this rule. The issuer may provide the Form 10
information in any filing of the issuer with the Commission. The Form 10
information is deemed filed when the initial filing is made with the Commission. |
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Official
source
|
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Overview
- New Rule 144(i) codifies that Rule 144 is not available for the resale of
securities issued by
companies that are, or previously were reporting and non-reporting shell companies
- Defined to include all companies that
meet the definition of shell company including blank check companies
- This
category
of companies is broader than the definition of shell company in Rule
405, as it applies to any issuer meeting that standard, whereas the
Rule 405 definition refers only to registrants
- A person who wishes to resell securities issued by a company that is, or
was, a reporting and non-reporting shell company, other than a business combination related shell company, would not be
able to
rely on Rule 144 to sell the securities.
- These kinds of companies have historically provided opportunities for abuse
of the federal securities laws
_________
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Rules Effective until February 15, 2008
144(b) Rule 144 Conditions SEC_CODE_REF_0090001192884
- Conditions to Be Met. Any affiliate or other person who sells
restricted securities of an issuer for his own account, or any person who sells
restricted or any other securities for the account of an affiliate of the issuer
of such securities, shall be deemed not to be engaged in a distribution of such
securities and therefore not to be an underwriter thereof within the meaning of
Section 2(a)(11) of the Act if all of the conditions of this rule are met.
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144(k) Exceptions for non-affiliates
Other Matters
Debt Securities
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Rule
144(f) manner of sale requirements eliminated
for debt securities
- Eliminates requirement that debt securities be
sold in brokers transactions (as defined
in Rule 144(g)) or in transactions directly with a market maker (as defined in
Section 3(a)(38)
of the Exchange Act)
- Also eliminates prohibition on the seller
soliciting potential purchasers or making payments in connection with the offer
or sale any person other than the broker who executes the order to sell the
securities
- Allows holders of debt securities
greater flexibility in the resale of their securities, including the option to
negotiate private resales of the securities
- _________
For
more detailed coverage, see
Rule 144(f): Manner of Sale Limitations
Volume
limitations have been relaxed for debt securities
- alternate determination of volume limitations
for debt securities to Rule 144(e) (this was not included in the original
proposal). Under the alternative volume limitation
test, resales of debt securities in amounts up to 10% of that tranche of
securities are permitted in a three month period.
For
more detailed coverage, see
Rule 144(f): Manner of Sale Limitations Debt securities
defined to include non-participating preferred stock and asset-backed securities
- Securities with debt-like characteristics
- Per new Rule 144(a)(4)
which adds debt securities as a defined term for purposes of Rule 144
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Equity Securities
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Changes
made to Rule
144(f) manner of sale requirements for equity securities
- Riskless principal transactions
- Also eliminates prohibition on the seller
soliciting potential purchasers or making payments in connection with the offer
or sale any person other than the broker who executes the order to sell the
securities
- Allows holders of debt securities
greater flexibility in the resale of their securities, including the option to
negotiate private resales of the securities
- _________
For
more detailed coverage, see
Rule 144(f): Manner of Sale Limitations
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SEC FAQs
- SEC
Interpretive Release 33-6099 1979
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Related Topics
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