Tag Archives: mandatory SEC filer

How is the Six Month Holding Period Computed under Rule 144(d)(1)(i)?

For mandatory SEC filers, the Rule 144 holding period is Six (6) Months.  This means that under Rule 144(d)(1)(i), a minimum of Six (6) Months must pass from the date restricted securities are acquired from an Issuer or from an Affiliate of the Issuer, whichever is later (the “Acquisition Date”) and any resale of the restricted securities under Rule 144 (the “Resale Date”).

What is a Mandatory SEC Filer?

The Six (6) Month holding period only applies to mandatory SEC Filers.  A mandatory SEC filer is a public company that is, and for at least the immediately prior 90 days, has been subject to the reporting requirements of Exchange Act Section 13 or 15(d).

What is the Acquisition Date for the Purposes of Rule 144?

The Acquisition Date is the date on which the restricted securities were acquired by being “paid for” or “fully earned.”  This is often much earlier than the date of a stock certificate.

How to Calculate the Rule 144 Holding Period in a Debt Conversion

For shares originating in a debt conversion, Rule 144 allows tacking onto the holding period of a Promissory Note.   In that case, the Acquisition Date would be the later of the date of Note, or the date funds were paid to the Company in the form of wire transfer or check, if the Note is evidence of a loan.   The Acquisition Date could then be years before a Notice of Conversion or a stock certificate was even issued.

How to Calculate the Rule 144 Holding Period for a Subscription Agreement

For stock purchased from the Issuer via Subscription Agreement, the Rule 144 holding period will begin on the later of the date the Subscription Agreement was countersigned, or on the date the Shareholder purchased the shares via wire transfer or check.  That is, a Shareholder cannot start the Rule 144 holding period merely by promising to buy shares by signing the Subscription Agreement–the shares must be paid for.

How to Calculate the Rule 144 Holding Period for a Consulting Agreement

For stock awarded as compensation under a Consulting Agreement, when the Rule 144 holding period would start depends on the language of the document and when the services were provided.  The shares awarded under a Consulting Agreement must be “fully earned” by providing services.

In some cases, the document itself will specify the “term” or period of time in which services are to be provided, and the rate at which a number of shares is earned.  In cases where the document was vague, confirmation from the Company’s CEO or confirmed by correspondence between the parties or Transfer Agent can be used to verify when the shares were considered “fully earned.”

Rule 144 Legal Opinions by OTC Securities Lawyer Matheau J. W. Stout, Esq.

OTC Securities attorney Matt Stout reviews documents at no cost for Shareholders seeking legal opinions under Rule 144 or Section 4(a)(1).   Shareholders who want to clear and sell restricted stock, or who want to remove the restricted legend from securities can contact OTCLawyers at (410) 429-7076 or mstout@otclawyers.com.