Securities & Corporate Governance - SEC Adopts Wide Ranging Changes to Rule 144
On November 15, the SEC adopted wide ranging amendments to Rule 144. As noted in its
press release, these amendments will be effective in January 2008 (60 days after publication in the Federal Register). The SEC release concerning the rule amendments has not yet been disseminated by the SEC.
The most significant of the changes are the following:
- non-affiliates of reporting companies will be able to freely resell restricted securities after only a six-month holding period instead of the current one year period (subject only to the Rule 144(c) public information requirement
until the securities have been held for one year);
- non-affiliates of non-reporting companies will be able to freely resell restricted securities after satisfying a 12-month holding period;
- for affiliates' sales, the SEC amended the manner of sale requirements for equity securities (eliminating them for debt securities) and relaxed the volume limitations for debt securities; and
- the threshold for requiring a Form 144 filing in connection with affiliates' sales has been raised to 5,000 shares or $50,000.
In addition, a number of Staff interpretations have been codified and the preliminary notes to Rule 144 have been streamlined.
The SEC decided not to combine Form 4 and Form 144 at this time, but they will continue to consider the issue and may take it up soon as a separate project. The SEC also did not include the proposed provision that would have tolled the Rule 144 holding period for up to six months while a security holder is engaged in hedging transactions.