When an executive officer, director or affiliate of a publicly traded company places an order to sell a specified number of unregistered shares within the next three months, they must file SEC Form 144 with the Securities and Exchange Commission (SEC) as a notice of their intent to sell. This requirement is pursuant to Rule 144 under the Securities Act of 1933, which regulates the resale of restricted securities and securities held by affiliates.
Certain conditions must be met in order for the sale to be exempt from the Securities Act registration requirements. They include the following:
- restricted securities must have been held by SEC-reporting companies for at least six months and at least one year for non-reporting companies
- the sale must not represent more than 1% of outstanding shares
- adequate public information about the issuer must be made available
- a brokerage firm or stockbroker must handle the transaction
- SEC Form 144 must be filed with the SEC at the time the sell order is placed with the broker if the seller is an affiliate and intends to sell more than 5,000 shares or securities with a value in excess of $50,000
Securities include common stock, preferred stock and debt securities, which includes asset-backed securities and nonparticipating preferred stock. If 90 days pass without a sale, a new SEC Form 144 must be filed. Form 144 can be sent electronically to the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system or filed in paper format. There is currently no requirement to file Form 144 on EDGAR.
With nearly 50 years of global regulatory experience, and as one of the first companies to actively engage with the XBRL filing program, Merrill is uniquely qualified to help filers worldwide successfully navigate ever-changing global compliance requirements. With Merrill, you can manage regulatory disclosures with absolute security, precision and accuracy.