Does Rule 144 apply to non-affiliates?
Asked by: Prof. Orlo Bernier I | Last update: February 17, 2026Score: 5/5 (30 votes)
Yes, Rule 144 applies to non-affiliates, but it offers a much more lenient path for selling restricted securities compared to affiliates; once the holding period (6 months for reporting companies, 1 year for non-reporting) is met and the issuer has current public information, non-affiliates can typically sell freely without volume limits, manner-of-sale rules, or Form 144 filings.
Do non-affiliates have to file Form 144?
Exceptions for non-affiliates:
They are not subject to volume limits, manner-of-sale requirements, or Form 144 filing requirements. They must still ensure the issuer of the securities provides current public information.
What is the Rule 144 for non-affiliates?
Non-Affiliates and Rule 144: For non-affiliates, Rule 144 is more lenient. Once the holding period has passed and the company is current with its public filings, non-affiliates can sell restricted securities without needing to follow the volume limitations or manner of sale requirements.
Who is an affiliate for Rule 144 purposes?
“Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the issuer. Directors and executive officers of companies are generally presumed to be affiliates.
Are there exemptions to Rule 144?
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.
SEC Rule 144 and Removing Restrictions on Securities
Can an affiliate holding unregistered shares sell under Rule 144?
Rule 144 allows an affiliate to sell the greater of 1% of the outstanding shares or the average of the last four weeks' trading volume with each Form 144 filing. The filing is good for 90 days (three months), which would allow for as many as four filings per year.
What are Rule 144's reporting requirements?
Rule 144 requires that a company has adequate current public information prior to: (i) the sale of securities by an affiliate or on behalf of an affiliate; and (ii) the sale of securities by a non-affiliate after holding securities of an SEC reporting company for a minimum of six months but less than one year.
Who are non affiliated shareholders?
Non-Affiliated Shareholders means holders of Equity Securities of an Offeree Issuer, other than a holder who (a) is the Offeror, Offeree Issuer, any of their Affiliates, and any Person Acting Jointly or in Concert with the Offeror or Offeree Issuer; (b) is a present or former officer, director, or, within the last 12 ...
Who are considered affiliates or control persons?
An affiliated person is someone in a position to influence the actions of a corporation. This includes directors, officers, and certain shareholders. Depending on the context, an affiliated person might be referred to simply as an "affiliate." Affiliated persons may also be called control persons or insiders.
Who is considered an affiliated person?
(1) As used in this subsection: (i) The term “affiliated person” means any person directly or indirectly controlling, controlled by, or under common control with a futures commission merchant, as the Commission, by rule or regulation, may determine will effectuate the purposes of this subsection.
What qualifies as an affiliate?
Definition of Affiliate: An affiliate is an entity connected to another through ownership, control, or contractual relationships. Key Determinants: Ownership stakes (5%-50%), voting rights, and management control mechanisms define affiliate status.
How to tell if a security is 144A?
As a result of the limitations on resale, and the related reduction in liquidity, the seller must make the purchaser aware that the securities are being sold pursuant to Rule 144A. Typically this is achieved by placing a legend on the security itself and including appropriate notice in the offering documentation.
How often can you sell under Rule 144?
If you are an affiliate, the number of equity securities you may sell during any three-month period cannot exceed the greater of 1% of the outstanding shares of the same class being sold, or if the class is listed on a stock exchange, the greater of 1% or the average reported weekly trading volume during the four weeks ...
How does the SEC define an affiliate?
An affiliate of, or person affiliated with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.
What is the difference between Rule 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.
Who is eligible for Rule 144A?
Rule 144A allows purchasers of such securities to resell those securities if: (1) the sale is to a qualified institutional buyer (QIB); (2) the seller takes affirmative steps to ensure that the buyer is aware that the seller relies on Rule 144A to sell their security; (3) the securities are not of the same class as ...
What are the three main types of affiliates?
What Are the 3 Main Types of Affiliates?
- Content Affiliates (aka Organic Masters) ...
- Paid Traffic Affiliates (aka Media Buyers) ...
- Influencer Affiliates (aka Social Sellers)
What is a non-affiliated third party?
The term "nonaffiliated third party" means any entity that is not an affiliate of, or related by common ownership or affiliated by corporate control with, the financial institution, but does not include a joint employee of such institution.
Is a family member an affiliate?
Definition & meaning
This group typically includes officers, directors, and principal stockholders who own ten percent or more of the corporation's shares. Immediate family members of these individuals are also considered affiliated persons.
What is an unaffiliated shareholder?
Unaffiliated Shareholders means Shareholders who are not affiliates of the Corporation for purposes of United States securities laws; View Source.
Is a shareholder an affiliate?
As per SEC Rule 405, an affiliate refers to a person or insider, such as a corporate officer, board member, or a shareholder owning 10% or more of the stock, who holds a controlling relationship with the company issuing the securities.
What are the three types of shareholders?
The three main types of shareholders, categorized by their stock and rights, are Common Shareholders, who have voting rights and variable dividends; Preferred Shareholders, who get fixed dividends and asset priority but usually no votes; and Insider Shareholders, who are company executives or employees, often holding shares for compensation or control. These distinctions affect their influence, income priority, and risk in a company.
What is the new law of Section 144?
Section 144 of the BNSS (which replaced Section 125 of the CrPC) focuses on providing maintenance to dependents, including wives, children, and parents, irrespective of their religious identity. The purpose of this section is to protect those unable to sustain themselves financially.
What is Rule 144 for dummies?
The rules of 144 outline the conditions under which restricted and controlled securities can be sold publicly. This includes requirements like holding the securities for a specific period and offering them to the public in a limited manner.
What is the difference between Form 4 and 144?
In particular, Form 144 must only be filed if an investor plans to sell more than 5,000 shares or $50,000 of total stock. Form 4 must be filed when an affiliate actually trades control stock.