Launch - Spring 2008 - (Page 10) >> legal SEC Adopts Amendments to Rule 144 Affecting Small Companies By Chris Anderson and Todd Reece The Securities and Exchange Commission recently approved amendments to Rule 144 under the Securities Act of 1933, to become effective on February 15, 2008. These amendments are intended to reduce regulatory requirements on the resale of securities in order to enhance the liquidity of securities sold in private transactions and facilitate capital formation, particularly for smaller companies. The principal amendments to Rule 144 include: (i) Shortening the holding period for restricted securities of reporting issuers (essentially publicly traded companies) from one year to six months for both affiliates and non-affiliates; (ii) Permitting non-affiliates of non-reporting issuers (essentially private companies) to resell restricted securities of non-reporting issuers after satisfying a one year holding period; (iii) Permitting non-affiliates of reporting issuers to resell restricted securities of reporting issuers without regard to the volume limitations, manner of sale or Form 144 filing requirements upon satisfying the Rule 144(d) six-month holding period (provided the issuer complies with public information requirements until the securities have been held for one year); and (iv) Eliminating all restrictions except for the “current public information” requirement for restricted securities held by non-affiliates of reporting companies after six months, and eliminating all restrictions for restricted securities held by non-affiliates of all companies after one year. The SEC provided the following table summarizing the new re-sale restrictions: Affiliate or Person Selling on Behalf of an Affiliate Restricted Securities of Reporting Issuers 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; and >>Filing of Form 144. 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; and >>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. 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. Restricted Securities of Non-Reporting Issuers The SEC’s amendments to Rule 144 summarized above will allow investors such as venture funds and other security holders to sell restricted securities more readily, should enable smaller companies to raise capital more effectively, and will ease some of the burdens of the SEC’s reporting and disclosure requirements applicable to such companies. In addition, the amendments to Rule 144 may change negotiating positions regarding the grant of registration rights and will impact restrictive legend removal practices. The amendments will be applicable to securities acquired before and after the February 15, 2008 effective date. $ Click here for the HTML version of this article on launchutah.com. 10 launch spring http://www.launchutah.com/article-legal-q12008.php http://www.launchutah.com/article-legal-q12008.php
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