Rule 144

by | May 12, 2016 | Financial Services

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There are various restrictions which apply to a business; one of which is Rule 144. This rule was edited by the Securities and Exchange Commission in 2007 to eliminate the 144(k) exemptions with holding periods reduced on fully reporting issuers. There are various holding periods with different implications.

Holding Period between 6 and 12 Months

Stocks in a fully reporting non-shell company could be sold if they have been held for over 6 months but less than a year. These activities may require the professional services of an experienced and competent broker in the market for the best outcomes.

Holding Period over a Year

A non-affiliate with stocks in a fully reporting non-shell company may have the restricted legend removed from the certificate if the stocks have been held for over a year. However, for the removing of non-reporting company restrictions, a legal opinion may be required if there is an exemption provided under Rule 144.

The process may involve:

  • Submission of original certificate
  • Submission of 144 sellers rep letter
  • Submission of a legal opinion if necessary
  • Submission fees
  • Submission of return shipment information

Professional Assistance

Not many ordinary consumers are familiar with the law on stocks and businesses; much less on Rule 144 with its implications. Hence, it is highly recommended to hire professional business consultants who are licensed market experts in this trade for professional assistance to enjoy the best of outcomes.

There are specific restriction removal instructions which must be complied with according to the law especially if shares were to be transferred to another party. Different service fees apply based on the different types of services required with each certificate.

It is common for professional service providers to charge a transfer fee per certificate issued, certificate cancellation fee and restricted legend removal legal fees.

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