Rule 144

On December 6, 2007 the SEC released the text of its recently adopted amendments to Rule 144 and Rule 145.  The effective date of the amendments is February 15, 2008.  The full text of the release can be found at www.sec.gov/rules/final/2007/33-8869.pdf.  The following sets forth a brief description of the revised 144 rules.

For an affiliate: (officer, director or someone who owns 10% or more of the issued and outstanding shares of the Company) no sales of shares can be made for six months from the date of issuance of the shares. After six months, the affiliates can sell up to one (1%) percent of the outstanding shares of the Company every three months in a broker’s transaction.  This means that they cannot be sold privately and must be sold on the public market.  An affiliate can never just “free up” shares, they can only have the restriction removed when they sell their shares in accordance with the rules set forth above.

For a non-affiliate: of the Company, no sales of shares can be made for six months from the date of issuance of the shares.  After the six month period the shareholder can remove the legend from the certificate and either hold it or sell it at any time.  The only requirement is that the Company has current information available. For a 1934 Act reporting company that means that the Company must be current in its filings. There is no restriction for non-affiliates that have their shares registered by way of an S-1 or other form of registration.
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