When Does the Rule 144 Holding Period Start for Subscription Agreements?

Investors in OTC Markets stocks usually sign a Subscription Agreement when purchasing shares through a Private Placement Memorandum (“PPM”).  For the purposes of Rule 144, the holding period does not necessarily start on the date the Subscription Agreement is signed.  Why?

Rule 144 Holding Period Begins on the Date Shares Were Acquired

Often, a Subscription Agreement will be signed days or weeks prior to an OTC Investor actually paying for the PPM stock.  An Investor cannot “lock in” a Rule 144 holding period until the OTC shares are actually paid for.

Rule 144 Holding Period Starts on the Date of Wire Transfer or Check

When a Subscription Agreement is signed before the stock is actually purchased, the Rule 144 holding period begins on the date of the wire transfer or check.   The reason is that the Investor’s funds were not actually at risk until the wire transfer or check was used to pay for the PPM subscription.

Rule 144 Opinions by Securities Lawyer Matt Stout

Shareholders of SEC Rule 144 stock acquired in PPMs via Subscription Agreement can contact Rule 144 lawyer Matt Stout for a no cost review of their certificates and supporting documentation at (410) 429-7076 or mstout@otclawyers.com.