What is the rule 144?

Rule 144 Governs the Sale of Restricted or Control Securities - Stocks That Could Not Otherwise be Sold Beceuse of the United States' Securities Act of 1933. The Securities Act was the u.s. Federal Government's First Regulation of the Stock Market and Was Enocked in the Wake of the Stock Market Crash of 1929. Among the Act’s Objectives Were to Help Level The Playing Field Between the Average Investor and the "Insiders" and regulated company.

Limited securities are those that have not yet been registered with the US Securities and Stock Exchange Commission (SEC), which oversees shares. Publicly issued shares are registered as part of the initial offer process, but some other shares will escape this inspection. Small, localized offers are often exempt, as well as shares are paid as part of the employee benefit plan or as compensated for professional services. Limited shares certificates are usually hundreds ofAction about their limited state. It is assumed that these initiates or associated entities have access to information that is not available for members of the investment public. This combination of internal knowledge and ownership of large shares blocks represents an unfair advantage and increases the potential for fraud. Rule 144 provides a balancing drug for this advantage when associated entities want to dispose of their shares.

rule 144 sets five basic conditions to ensure that transactions are fair:

1 period of possession: Limited securities of the company, subject to the requirements of reporting the Securities Act of 1934 must be held for at least six months. For those who are not obliged to report, the period of possession is one year.

2. Reasonable up -to -date information: before the sale must meet the companyAdavky to report messages in the Stock Exchange Act

3. The volume volume formula: The volume sold by the associated entity during any three -month period is limited to 1 percent of outstanding shares or 1 percent of the weekly bulk volume within four weeks before sale, depending on what is larger.

4. Ordinary brokerage transactions: Sale of associated companies must be designed as normal transactions at normal commission rates, without requesting shopping orders.

5. Submission of the proposed sale: SEC must be notified if the summary sale exceeds 5,000 shares or $ 50,000 in the period of three months - and if the entire sale is not completed.

Finally, the rule 144 requires removal from the stamps of the Stock stamps as limited. This can only be removed by the stock transmission agent. A concurrence of a lawyer issuing a company is also required.