Tag Archives: 4-1 opinion

Rule 144 Holding Period for Shares Issued Per Anti-Dilution Rights

When does the Rule 144 holding period begin for shares received due to anti-dilution rights?

For purposes of Rule 144(d), additional shares of stock acquired from an Issuer pursuant to anti-dilution rights have the same holding period as the original shares governed by the anti-dilution provision.   Another way of saying this is that the new shares can tack onto the holding period of the old shares.

Shareholder Opinion Letters for OTC Markets and Bulletin Board Stocks

OTC securities attorney Matt Stout drafts Rule 144 and Section 4(a)(1) opinion letters for Shareholders of Pink Sheet and Bulletin Board companies trying to clear and sell restricted stock.

Questions regarding Rule 144 holding periods, shell status or Section 4-1 alternatives to Rule 144 can be emailed at mstout@otclawyers.com or (410) 429-7076.

What is a Penny Stock?

Penny Stocks are Quoted on the OTC Markets Pink Sheets

Penny Stocks are securities that are not listed on a national securities exchange like the NYSE or NASDAQ, and are also priced under Five Dollars ($5.00) Per Share.  The SEC’s definition of a Penny Stock is found in SEC Rule 3a51-1.  Penny Stocks are usually quoted on the over-the-counter (OTC) Markets on the Pink Sheets.  As a practical matter, most Penny Stocks trade well under a dollar, and many trade below a penny.

Penny Stocks Can Be Quoted on the OTCQB

OTCMarkets has three market tiers where OTC stocks are quoted.  These include Pink Sheets, OTCQB and OTCQX.  While stock price is a criteria for uplisting on the OTCMarkets.com to OTCQB, the minimum share price is One Penny ($0.01), well below the Five Dollars ($5.00) per share used by the SEC to define a penny stock. Since there is no minimum asset or revenue criteria for uplisting to the OTCQB, many OTCQB stocks are considered Penny Stocks.

OTCQX Companies Are Not Technically Penny Stocks

Stock price is not the only criteria for Penny Stocks. Although OTCQX, the highest market tier on OTCMarkets.com, has an initial minimum bid price criteria for US OTCQX companies of only Twenty-Five Cents ($0.25) and an ongoing minimum price of Ten Cents ($.10), OTCQX companies are not technically Penny Stocks because they meet at least One (1) of the exceptions to the Penny Stock Rule below.

Exceptions to the Penny Stock Rules

OTCQX securities are not Penny Stocks, because the criteria for quotation on the OTCQX requires these securities meet One (1) of these exclusions from the Penny Stock Rules:

  1. Net tangible assets  greater than Two Million Dollars ($2,000,000) if the company has been in operation at least Three (3) Years; or
  2. Net tangible assets of greater than Five Million Dollars ($5,000,000) if the company has been in operation less than Three (3) Years; or
  3. Revenue of at least Six Million Dollars ($6,000,000) for the last Three (3) Years.

Legal Opinion Letters for Shareholders with Restricted Penny Stocks

OTC Markets and Bulletin Board securities lawyer Matt Stout issues Rule 144 legal opinions and Section 4(a)(1) opinions for shareholders who own penny stocks and over-the-counter stocks, as well as OTC Markets Pink Sheets seeking to become current or to uplist on the OTCQB.

Contact OTCLawyers at (410) 429-7076 or mstout@otclawyers.com today.

Securities Law Opinion Letters Under Rule 144 and 4(1)

Legal Opinions for OTC Markets Issuers and Shareholders

A large part of Matheau Stout’s securities law practice includes the research and drafting of legal opinions for the sale of restricted stock of Issuers listed on the OTC Bulletin Board, Pink Sheets and OTCMarkets.

Rule 144 Opinion Letters

The most common type of securities opinion letter is known as the 144 Letter, or Rule 144 Legal Opinion.   144 Letters are used by Transfer Agents when removing restricted legends from OTC stocks. Most brokerages specializing in OTC Bulletin Board and Pink Sheet stocks will not accept deposits of certificates without a Rule 144 legal opinion drafted by an experienced securities attorney like Matt Stout.

Section 4(a)(1) Legal Opinion Letters

When Rule 144 is not available because the OTC Markets company is a current or former shell, experienced securities attorneys like Matheau J. W. Stout, Esq. can review certificates and documentation to see if Section 4(a)(1) can apply.

Section 4(a)(1) is also known commonly as Section 4-1, and is available only if the securities in question are greater than Two (2) Years old, and the Shareholder is not an Issuer, Underwriter or Dealer.

OTC Markets Securities Lawyer Matt Stout

Shareholders and Brokers can request SEC Rule 144 opinions from Matt Stout, Securities Lawyer by calling (410) 429-7076 or via email, at mjwstout@gmail.com or mstout@otclawyers.com.

More information on clearing restricted stock using Rule 144 and Section 4(a)(1) is available at securities law blogs published by Matheau J. W. Stout including 144letters.net144-Opinions.comRestrictedStock.co, andRestrictedStockOpinion.net.