Affiliate Shareholders of OTC Markets and Bulletin Board public companies are those serving as Officers, Directors, control persons or owners of more than 9.99% of the Issuers voting securities of any class (“Affiliates”).
Affiliates Submit SEC Form 144 When Selling Restricted Stock
Affiliates of OTC companies know that in order to clear and sell restricted stock, they need to fill out a Form 144 and submit that to their broker, which will allow them to sell up to 1% of the total issued and outstanding common stock of the Issuer within a 90 day period.
Increasing the Number of Shares Sold Requires an Amendment to Form 144
Under Rule 144(h), an amendment to SEC Form 144 needs to be filed if the Affiliate wishes to sell more securities during the 90 day period than was originally declared for sale on the original Form 144.
For example, if an Affiliate files a notice on SEC Form 144 for the proposed sale of less than the full amount of shares that could be sold under the volume limitations set forth in Rule 144(e), but then decides to sell up to 1% of the issued and outstanding, an amendment is needed. For this reason, it may be wise for Affiliates to consider simply using the 1% number in the original Form 144 filing.
No Form 144 Amendment is Needed if the Affiliate Shares are Unsold
Under Rule 144(h), if the Affiliate filed a Form 144, but does not sell all of the securities referred to during the 90 day period, no amendment needs to be filed with the SEC.
No Form 144 Amendment is Needed Due to a Stock Split
If after an Affiliate’s filing of Form 144, the OTC Issuer declares a stock split, no new Form 144 filing is needed within the 90 day period to sell the correct number of post-split shares which equate to the number of pre-split shares the Affiliate had already declared on Form 144. The broker will simply make the adjustment and inform the Affiliate of the new maximum to be sold under the Rule 144 volume trading limitations.
No Form 144 Amendment is Needed to Change Brokers
Individual brokerages may have their own policies on this, but the SEC does not require a new Form 144 or amendment to be filed when an Affiliate uses more than one broker, since it is the share number and trading volume limitation which governs trading, and not the brokerage used to execute the trades.
Likewise, under Rule 144(h), an Affiliate filing Form 144 who indicates that the Affiliate may sell shares through more than one broker is not required to allocate a specific number of shares to each broker on Form 144.
OTC Securities Lawyer Helps Affiliates Sell Restricted Stock
Management and control persons of OTC Markets and Bulletin Board public companies can contact Matt Stout for referrals to OTC brokers and assistance filling out SEC Form 144. Securities lawyer Matt Stout reviews certificates, filings and documents at no cost to determine if a Rule 144 legal opinion can be issued. Shareholders can email Matheau J. W. Stout, Esq. at email@example.com or call (410) 429-7076.