Rule 144 – General Information For Non-Affiliates

We are often asked to outline the requirements for a Rule 144 resale and thought to provide some general guidance on the topic in this post. Please note, however, that Rule 144 is complicated and this post is only intended to provide limited background information - if you intend to resell pursuant to Rule 144, we urge you to consult with a qualified professional.

Short Answer

The following short answer applies to a seller that is not an affiliate of the company whose securities are to be sold, and applies only to securities of a company that is not currently a "shell company" and that has been a reporting company in the United States for at least 90 days immediately prior to the sale.

In the situation described above, Rule 144 may be available for resale by a seller if the following two conditions are satisfied:

the seller has owned the securities for at least six months; and if the seller has not owned the securities for at least one year, the company is current in its reporting obligations (other than Form 8-K reports). Rule 144 imposes additional conditions for the resale of securities initially issued by a shell company or a former shell company. If the securities to be sold were initially issued by a shell company or a former shell company that has since ceased to be a shell company, Rule 144 can be used if:

the company is subject to the reporting requirements of section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports and other materials required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, other than Form 8-K reports; and at least one year has elapsed since the company filed a document (typically on Form 8-K) containing the type of disclosure about the company and its business that would normally be included in a Form 10 initial registration statement, reflecting the company's status as an entity that is no longer a shell company. Form 10 is the initial registration form used to register a company as a reporting company with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934. Background Information

Rule 144 is a safe harbor available for the sellers of restricted securities (e.g. securities acquired in a private placement) or control securities (i.e. securities held by an affiliate of the issuer).

Under the Securities Act of 1933 (the "Securities Act"), if any person (including an investor) offers to...