What is Rule 144?

by | May 25, 2018 | Financial Services

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Rule 144 is governed by the Securities and Exchange Commission. This complex rule was put in place to delegate how restricted securities will be handled. Having someone that has experience managing securities that fall under Rule 144 on your team is critical.

What You Need To Know

Understanding this particular rule is vital to ensure that every step necessary is taken comply with the SEC rules. Here are some basics:

  1. What securities fall under this rule?

Restricted, control and unregistered securities are governed by this rule.

  1. What are the conditions of the rule?

There are five conditions when it comes to selling these types of securities:

  • There is a prescribed holding period that has to be met before the sale of these types of securities.
  • There must be sufficient information about the company before the shares can be sold.
  • If the owner is an affiliate of the company, sales are limited to 1% of holdings.
  • Regular trading conditions have to be met as well.
  • If the value of the stock is more than $50,000 or 5000 shares a proposed sale notice has to be filed with the SEC.
  1. Who is governed by this rule?

Sellers of all standing including underwriters, issuers and dealers

Other things you should know about this rule is that there is a registration requirement in just about every state, but there are exemptions from the requirements. The right source will be able to help you figure out if the exemptions apply or not for your specific situation.

Colonial Stock Transfer

If you need help with understanding this rule or managing the rule, Colonial Stock Transfer is the company that can help you get your answers and get the information that you need to ensure you are making informed decisions!

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