Rule 144

• Category: Letters - Seller's Representation
• State: Multi-State
• Control #: US-1044BG
• Format: Word; Rich Text

Description Sec Rule 144a

When you acquire restricted securities or hold control securities, you must find an exemption from the SEC's registration requirements to sell them in a public marketplace. Rule 144 allows public resale of restricted and control securities if a number of conditions are met. Restricted securities are securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer. Investors typically receive restricted securities through private placement offerings, Regulation D offerings, employee stock benefit plans, as compensation for professional services, or in exchange for providing "seed money" or start-up capital to the company An affiliate is a person, such as an executive officer, a director or large shareholder, in a relationship of control with the issuer. Control means the power to direct the management and policies of the company in question, whether through the ownership of voting securities, by contract, or otherwise. If you buy securities from a controlling person or "affiliate," you take restricted securities. Attorneys, transfer agents and brokers must be certain that all of the conditions of Rule 144 are met prior to taking action to remove a restrictive legend, but only the Seller can ensure that all the conditions are present at the actual time of sale. In order to protect themselves in issuing opinion letters and removing legends, transfer agents and most attorneys now require a letter from the Seller making certain representations and affirmations regarding their eligibility to rely on Rule 144 in the sale of their securities. This letter is commonly referred to as a Seller's Representation Letter.

Rule 144 for Foreign Private Issuers (Fps) is a regulation established by the U.S. Securities and Exchange Commission (SEC) to provide a safe harbor exemption for the sale of restricted or control securities by non-U.S. companies that are incorporated or organized outside the United States. This regulation aims to facilitate the efficient capital raising and liquidity for Fps while maintaining appropriate investor protections. Here is a detailed description of Rule 144 for Foreign Private Issuers, along with some related keywords and subtypes: Description: 1. Rule 144 Overview: Rule 144 is a key provision under the Securities Act of 1933 that governs the resale of restricted and control securities. It provides specific conditions for the public resale of such securities, allowing investors to sell them to the public without having to comply with the full registration requirements. 2. Applicability to Foreign Private Issuers: Rule 144 is available to Fps, which are non-U.S. companies that do not meet the definition of a U.S. domestic issuer. Fps must comply with certain requirements to utilize this exemption, ensuring the securities are sold in the United States in a manner consistent with both investor protection and the efficient operation of the securities markets. 3. Conditions for Resale: To use Rule 144 as a safe harbor exemption, Fps need to satisfy various conditions: — Holder Requirements: The securities must have been beneficially owned by a non-U.S. person for at least one year before the requested sale. — Reporting Requirements: ThFBIPI must have complied with its Exchange Act reporting obligations for the previous 12 months. — Adequate Public Information: Sufficient and timely information about the FBI should be available to investors, typically achieved by filing or furnishing specified reports with the SEC. — Trading Volume Limitations: The amount of securities sold within any three-month period cannot exceed the greatest of 1% of the outstanding shares of the same class or the average weekly trading volume during the four calendar weeks preceding the sale. — Manner of Sale: Sales should be executed through routine broker transactions on a securities exchange or in transactions directly with a market maker. Ordinary brokerage transactions are preferred over significant promotional efforts. Subtypes of Rule 144 for Foreign Private Issuers: 1. Rule 144A for Fps: This provision allows qualified institutional buyers (Ribs) in the United States to trade restricted securities of certain foreign issuers without being subject to the typical holding period under Rule 144. 2. Rule 145 for Fps: This regulation pertains to business combinations of Fps, which involve acquisitions, mergers, or the sale of assets, and requires disclosure and registration obligations to provide transparency to affected shareholders. 3. Rule 146 for Fps: This rule provides interpretive guidance on the definition of a non-U.S. company for the purpose of Rule 144. It aids in determining whether an entity is an FBI and therefore eligible to use Rule 144. In conclusion, Rule 144 for Foreign Private Issuers provides a valuable exemption for non-U.S. companies to sell restricted securities in the United States under specific conditions. Understanding and complying with Rule 144 allows Fps to access U.S. capital markets while ensuring investor protection and market efficiency.