Shareholder FAQs- 144 Restriction




Q: What is Rule 144?


Answer


Rule 144 of the Federal Securities Act of 1933 concerns restricted securities. Stock issued directly by an issuer or acquired by an insider or control person is always restricted in nature unless there is an exemption, registration, or other safe harbor that allows the stock to be free-trading. Rule 144 provides a way for shareholders to sell stock that is restricted, once certain provisions are met.


Important: The information on this page is based on the assumption that the issuer has either never been a shell or, if so, has complied with Rule 144(i)(2).


If you are eligible to release the legend from your shares under Rule 144, you have two options.


Option 1: Broker

You can submit your certificate(s) to your broker for 144 processing. In most cases, your broker will assist in gathering the required documents, and then arrange for us to release the legend from your shares so that free-trading stock can be deposited directly into your brokerage account. (Please note: Insiders must follow this option.)


Option 2: Direct

You can submit your certificate(s) to Capital Transfer Agency Inc.  directly for legend removal if you are a non-insider/non-affiliate of the issuing company. We will arrange for a free-trading stock certificate to be sent to the destination of your choice (usually your home, office, or broker).


Either way, we require the following documents:

1.     Original Stock Certificate(s)

2.     Representation Letter

3.     Legal Opinion

4.     Instruction/Delivery Letter

5.     Applicable Fees

6.     Form 144 (for insiders/affiliates ONLY)



Contact Sandra Presnail with any questions you may have regarding this process.

Restricted Securities of Reporting Issuers

Affiliate or person selling on behalf of an affiliate


During six-month holding period – no resales under Rule 144 permitted.

After six month holding period – may resell in accordance with all Rule 144 requirements including:


  • Current public information,
  • Volume limitations,
  • Manner of sale requirements for equity securities &
  • Filing of Form 144

Non-Affiliate (and has not been an affiliate during the prior three months)


  • During six-month holding period – no resales under Rule 144 permitted.
  • After six month holding period but before one year – unlimited public resales under Rule 144 except that the current public information requirement still applies.
  • After one year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.


Restricted Securities of Non-Reporting Issuer

Affiliate or person selling on behalf of an affiliate

During one-year holding period – no resales under Rule 144 permitted.


After one-year holding period – may resell in accordance with all Rule 144 requirements including:

  • Current public information,
  • Volume limitations,
  • Manner of sale requirements for equity securities
  • & Filing of Form 144


Non-Affiliate (and has not been an affiliate during the prior three months)


  • During one-year holding period – no resales under Rule 144 permitted.
  • After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.