Who is a Control Person Under Rule 144?

Affiliates According to Rule 144

An affiliate under SEC Rule 144 is, in general terms a person, such as an officer, director or large shareholder, in a relationship of control with the public company.

Rule 144 Affiliates Include Officers, Directors and Others by Beneficial Ownership

The standard group of easily identifiable affiliates includes a company’s officers, directors, or owners of greater than 9.99% of the securities of any class. But then, under the concept of beneficial ownership, we must add to that list, the spouse of an affiliate, or anyone living in the same household as an affiliate.  They too, are considered affiliates under Rule 144 because they are deemed in theory to exercise the same type of control.

How Does the SEC Define Control Person?

According to the SEC, “control” means the power to direct the management and policies of the public company.  That control could be exercised by an affiliate through ownership of voting securities or by agreement.

Does the Securities Act or Rule 405 Define Control Person?

However, the Securities Act of 1933 doesn’t define the terms “control person” or “control relationship”. That being said, in Rule 405, the SEC defines “control” as follows:

“The term “control” (including the terms “controlling,” “controlled by,” and “under common control with,” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.”

Affiliate shareholders of microcap public companies quoted on the OTC Markets, or listed on NASDAQ or NYSE can contact an experienced securities attorney for a no cost review of their Form 144, stock certificates and supporting documentation at (410) 429-7076.  If an opinion can be issued, affiliates will receive a prompt turnaround and a reasonable flat fee.