What Is SEC Form 144: Notice of Proposed Sale of Securities?
Let me explain SEC Form 144 directly: it's a document from the Securities and Exchange Commission that you, as an executive officer, director, or affiliate of a company, must file when you're placing an order to sell that company's stock. This applies during any three-month period where the sale exceeds 5,000 shares or units, or has an aggregate sales price over $50,000. You should know this is tied to Rule 144 of the Securities Act of 1933.
Key Takeaways
You need to file Form 144 with the SEC for any order to sell company stock in a three-month period exceeding those thresholds I mentioned. Importantly, when you file, you must have a genuine intention to sell the securities within a reasonable time after submitting the form. Since these sales are often closely tied to the issuing company's interests, you have to register the securities under Section 5 of the Securities Act of 1933.
Understanding Form 144: Notice of Proposed Sale of Securities
If you're selling restricted, unregistered, or control securities in the U.S., you must follow Rule 144 from the Securities Act of 1933, which was created to protect investors after the 1929 stock market crash. This rule simplifies the process by offering exemptions from registration if you meet certain conditions. Sellers can include issuers, broker-dealers, or underwriters.
Given how these sales relate to the company's interests, filers like you must register under Section 5. But if conditions are met, Rule 144 provides the exemption for resale. Remember, all parties need a transfer agent to remove the securities' legend before any sale.
As an affiliate, you file Form 144 as notice when the sale under Rule 144 exceeds 5,000 shares or $50,000 in any three-month period. You must intend to sell within a reasonable time post-filing. The SEC doesn't mandate electronic filing via EDGAR, so you can choose print or electronic. Additional details might include your address, IRS number, payment nature, and recent similar sales.
Special Considerations
Under Rule 144, specific conditions apply for selling these securities. Companies must adhere to holding or lock-up periods—six months for public companies and one year otherwise. They also need to provide public information like business descriptions, financial statements, disclosures, and details on officers and key personnel.
Affiliates can't resell more than 1% of outstanding shares, and normal trading conditions apply. As noted, you must file notice for sales over 5,000 shares or $50,000 in three months.
Lock-Up Agreement
Underwriters require company executives, managers, employees, and venture capitalists to sign lock-up agreements around an IPO to stabilize the stock price in the initial months. This is a binding contract preventing insiders from selling shares for a set period, typically 180 days, though it can range from 120 to 365 days.
Other Relevant Forms
Beyond Form 144, key SEC forms include S-1 and S-1/A for registration statements, 10-K and 10-Q for annual and quarterly reports, Form 4 for changes in beneficial ownership, Form 12b-25 for late filing notifications, and Form 15 for termination of registration. This isn't exhaustive; check the SEC website for the full list and downloads.
Example of Form 144: Notice of Proposed Sale of Securities
You can find examples on EDGAR by searching a company. For instance, on April 26, 2018, Lee Kirk, a director at Guaranty Bancshares, filed to sell 20,891 shares worth $686,896.08 on Nasdaq, with the sale period from April 7 to June 12, 2018.
