Post by fastwalker on Oct 31, 2004 11:16:31 GMT -5
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Why yes... HERE ...
Source: IQ
Restricted Shares - Explained !
«<br>Securities/Stocks that are not registered, cannot be offered or sold unless they are registered with the S.E.C. or exempt from registration.
If, however, the buyer of restricted securities has no management or major ownership interests in the company, the restricted status of the securities expires over a period of time.
Under Rule 144, the restriction lapses upon transfer of ownership if the following conditions are met.
1. The securities have been owned and fully paid for at least one year (there are special exceptions that we'll skip here).
2. Current financial information must be made available to the buyer. Companies that file 10K and 10Q reports with the SEC satisfy this requirement.
3. The seller must file Form 144, "Notice of Proposed Sale of Securities," with the SEC no later than the first day of the sale. The filing is effective for 90 days. If the seller wishes to extend the selling period or sell additional securities, a new form 144 is required.
4. The sale of the securities may not be advertised and no additional commissions can be paid.
5. If the securities were owned for between one and two years, the volume of securities sold is limited to the greater of 1% of all outstanding shares, or the average weekly trading volume for the proceeding four weeks. If the shares have been owned for two years or more, no volume restrictions apply to non-insiders. Insiders are always subject to volume restrictions.
Even if you know almost nothing about securities law, you have probably heard of Rule 144. You may have some vague idea that it has something to do with "restricted stock." Therein lies the next question: what is "restricted stock?"
The Federal Securities Act of 1933 (the "Securities Act") generally requires that stock and other securities must be registered with the Securities and Exchange Commission (the "S.E.C.") prior to their offer or sale, unless the transaction or the securities themselves are exempt from registration. Registering securities with the S.E.C. can be expensive and time-consuming.
Note that Rule 144 only comes into play when one is seeking an exemption from registration. If stock is registered and unrestricted and one is not an affiliate, one is free to sell it without reference to the conditions of Rule 144. If stock is registered when it is originally issued and later becomes restricted (as explained below), a sale transaction will require registration (often referred to as "registration for resale") anew, or an exemption from registration.
Normally, if securities are registered when they are first issued, then they do not bear any restrictive legend and are not deemed restricted securities. Restricted securities are generally those which are first issued in a private placement exempt from registration and which bear a restrictive legend. The legend commonly states that the securities are not registered and cannot be offered or sold unless they are registered with the S.E.C. or exempt from registration. The restrictive legend serves to ensure that the initial, unregistered sale is not part of a scheme to avoid registration while effectuating some broader distribution than the initial sale.
Rule 144 is used for sales of restricted stock by any person and for sales of restricted and non-restricted stock by or for the account of an affiliate. The conditions contained in Rule 144 with which one must comply in order to meet the safe harbor for non-underwriter status concern available information, the length of time the person has owned the securities, and the amount of securities sold. First, public information regarding the issuer, i.e., reports periodically filed with the S.E.C. by reporting companies, must be available. Second, generally, the seller must have owned the securities for at least one year. There are extensive rules concerning when one may "tack" onto his own holding period the length of time a previous owner held the securities. Also, for holding period purposes, securities are not fungible. The holding period requirement does not apply to affiliates selling unrestricted securities. Third, one may only sell under the Rule in any three-month period an amount equal to the greater of 1% of the outstanding shares of the issuer or the previous four-week period's average weekly trading volume of the issuer's securities. The sale must also be through a broker or market maker.
Many also don't realize that, with the exception of subsection (k), Rule 144 is used only for "public sales." Where the owner of a controlling block of stock in a public company negotiates a private sale of his entire block with a buyer, the Rule does not come into play. In that event the buyer, who must have access to adequate information about the issuer and qualify as a "sophisticated investor," would receive restricted shares, since they would be acquired in a transaction not involving a public offering.
The Commission is amending the holding period
requirements contained in Rule 144 to permit the resale of
limited amounts of restricted securities by any person after a
one-year, rather than a two-year, holding period.
URL: invest-faq.com/articles/regul-sec-144.html
« Last Edit: Oct 20th, 2004, 6:44pm by fastwalker » 66.25.79.105
Why yes... HERE ...
Source: IQ
Restricted Shares - Explained !
«<br>Securities/Stocks that are not registered, cannot be offered or sold unless they are registered with the S.E.C. or exempt from registration.
If, however, the buyer of restricted securities has no management or major ownership interests in the company, the restricted status of the securities expires over a period of time.
Under Rule 144, the restriction lapses upon transfer of ownership if the following conditions are met.
1. The securities have been owned and fully paid for at least one year (there are special exceptions that we'll skip here).
2. Current financial information must be made available to the buyer. Companies that file 10K and 10Q reports with the SEC satisfy this requirement.
3. The seller must file Form 144, "Notice of Proposed Sale of Securities," with the SEC no later than the first day of the sale. The filing is effective for 90 days. If the seller wishes to extend the selling period or sell additional securities, a new form 144 is required.
4. The sale of the securities may not be advertised and no additional commissions can be paid.
5. If the securities were owned for between one and two years, the volume of securities sold is limited to the greater of 1% of all outstanding shares, or the average weekly trading volume for the proceeding four weeks. If the shares have been owned for two years or more, no volume restrictions apply to non-insiders. Insiders are always subject to volume restrictions.
Even if you know almost nothing about securities law, you have probably heard of Rule 144. You may have some vague idea that it has something to do with "restricted stock." Therein lies the next question: what is "restricted stock?"
The Federal Securities Act of 1933 (the "Securities Act") generally requires that stock and other securities must be registered with the Securities and Exchange Commission (the "S.E.C.") prior to their offer or sale, unless the transaction or the securities themselves are exempt from registration. Registering securities with the S.E.C. can be expensive and time-consuming.
Note that Rule 144 only comes into play when one is seeking an exemption from registration. If stock is registered and unrestricted and one is not an affiliate, one is free to sell it without reference to the conditions of Rule 144. If stock is registered when it is originally issued and later becomes restricted (as explained below), a sale transaction will require registration (often referred to as "registration for resale") anew, or an exemption from registration.
Normally, if securities are registered when they are first issued, then they do not bear any restrictive legend and are not deemed restricted securities. Restricted securities are generally those which are first issued in a private placement exempt from registration and which bear a restrictive legend. The legend commonly states that the securities are not registered and cannot be offered or sold unless they are registered with the S.E.C. or exempt from registration. The restrictive legend serves to ensure that the initial, unregistered sale is not part of a scheme to avoid registration while effectuating some broader distribution than the initial sale.
Rule 144 is used for sales of restricted stock by any person and for sales of restricted and non-restricted stock by or for the account of an affiliate. The conditions contained in Rule 144 with which one must comply in order to meet the safe harbor for non-underwriter status concern available information, the length of time the person has owned the securities, and the amount of securities sold. First, public information regarding the issuer, i.e., reports periodically filed with the S.E.C. by reporting companies, must be available. Second, generally, the seller must have owned the securities for at least one year. There are extensive rules concerning when one may "tack" onto his own holding period the length of time a previous owner held the securities. Also, for holding period purposes, securities are not fungible. The holding period requirement does not apply to affiliates selling unrestricted securities. Third, one may only sell under the Rule in any three-month period an amount equal to the greater of 1% of the outstanding shares of the issuer or the previous four-week period's average weekly trading volume of the issuer's securities. The sale must also be through a broker or market maker.
Many also don't realize that, with the exception of subsection (k), Rule 144 is used only for "public sales." Where the owner of a controlling block of stock in a public company negotiates a private sale of his entire block with a buyer, the Rule does not come into play. In that event the buyer, who must have access to adequate information about the issuer and qualify as a "sophisticated investor," would receive restricted shares, since they would be acquired in a transaction not involving a public offering.
The Commission is amending the holding period
requirements contained in Rule 144 to permit the resale of
limited amounts of restricted securities by any person after a
one-year, rather than a two-year, holding period.
URL: invest-faq.com/articles/regul-sec-144.html
« Last Edit: Oct 20th, 2004, 6:44pm by fastwalker » 66.25.79.105