Rule 144(a)(3)

Rule 144(a)(3) identifies what sales produce restricted securities. Control securities are those held by an affiliate of the issuing company. An affiliate is a person, such as an executive officer, a director or large shareholder, in a relationship of control with the issuer.

What is a Rule 144 restriction?

Rule 144 provides an exemption and permits the public resale of restricted or control securities if a number of conditions are met, including how long the securities are held, the way in which they are sold, and the amount that can be sold at any one time.

What is the difference between 144 and 144A?

Ordinarily, a two-year holding period applies under SEC Rule 144 to institutions that buy restricted securities from issuers. By allowing trades among qualified institutions, Rule 144A allows shorter-term investment in these securities.

Can an issuer use Rule 144?

The SEC allows only qualified institutional buyers (QIBs) to trade Rule 144A securities. These institutions are large sophisticated or ganizations with the primary responsibility of managing large investment portfolios with at least $100 million in securities. Appendix A provides the SEC definition of QIB.