Rule 144’s Current Public Information Requirement
Rule 144 of the Securities Act provides a safe harbor from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) for resales of restricted and control securities if specified conditions are met. One of the requirements of Rule 144 is that the issuer have current public information available to the public at the time of the resale. When applicable, issuers must satisfy the current public informational requirements as set forth in Rule 144(c) at the time of each sale of securities in reliance on Rule 144.
What constitutes current information depends upon whether the issuer is an SEC reporting issuer or shell company.
SEC Reporting Issuers
SEC reporting issuers must have been subject to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) for at least 90 days. The 90 day period begins on the date of effectiveness of the issuer’s registration statement under Section 12 of the Exchange Act. If the issuer filed an S-1 registration statement under the Securities Act which precedes effectiveness of a Section 12 registration statement, the 90-day waiting period will commence on the effective date of the Form S-1. If an issuer is delinquent in its SEC reports it may not satisfy the current public information requirement because it provided SEC Rule 15c2-11 information.
Additionally, SEC reporting companies must have filed all reports required to be filed during the preceding 12 months or such shorter period that reports were required to be filed in order to have provided current public information.
Where an SEC reporting company fails to make a required SEC filing, the safe harbor of Rule 144 is not available for the resale of its shareholders’ shares. Shareholders relying upon Rule 144 must be selling until the current public information requirement is satisfied by the issuer.
Shareholders risk non-compliance with Rule 144 if they sell securities after an issuer files a Form 12b-25 because if the issuer fails to file the late report, any sales made during the delinquent period do not satisfy the requirements of Rule 144. Where a public company files the report late, sales made after the filing of the 12b-25 but before the late filing, must satisfy Rule 144’s current public information requirements.
A non-reporting issuer may satisfy the current public information requirement of Rule 144 by providing the information specified in Rule 15c2-11of the Exchange Act, making it publicly available and keeping the information current. Securities of issuers quoted by the OTC Markets with a Pink Sheet Current information disclosure tier satisfy the requirements of Rule 15c2-11.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855