How Long Before Former Affiliates Can Sell Stock Under Rule 144?

When Can Former Affiliates Sell 144 Stock Without Trading Volume Limits?

Under Rule 144, an ex officer, director, or “control person” of a publicly traded company can sell shares without the trading volume limits after more than than 90 days have elapsed since he or she stopped being an Affiliate.

How Does Someone Cease to Be an Affiliate Under Rule 144?

An Affiliate becomes a “Non Affiliate” by resigning from positions of control within the company.  This means he or she resigns as an officer or director.

Of course, Shareholders who own more than 10% of a company’s voting stock are also considered Affiliates under Rule 144, and this status ceases once they have transferred enough stock such that they own less than 10%.

Affiliates Can Document Non Affiliate Status Under Rule 144 With These Documents

  1. This provides the date when the Affiliate resigned….A Letter of Resignation from the position as officer or director;
  2. This shows the Company acknowledged the resignation….A Board of Director’s Resolution accepting the resignation and appointing another officer or director in the Affiliate’s place;
  3. This shows that the information was made public….An OTCMarkets.com or SEC filing such as an 8-Ks or Disclosure that lists the date of the Affiliate’s resignation;
  4. This shows when a Shareholder first owned less than 10%….a stock purchase agreement, stock assignment, or a portion of the Transfer Agent’s shareholder’s list showing when the former Affiliate’s ownership percentage dropped below 10%.  This could be due to issuances of stock to others, which raised the issued and outstanding, or due to the former Affiliate’s sale or gift of stock.

Current and former Affiliates can contact securities attorney Matheau J. W. Stout at mstout@otclawyers.com or (410) 429-7076 to discuss how to document non affiliate status under SEC Rule 144.