Generally, Rule 144(c) of the Securities Act of 1933, as amended (the “Securities Act”) provides that stockholders of public companies cannot rely upon Rule 144 for resales unless the issuer satisfies certain informational requirements. The requirements depend upon whether the issuer is a reporting or non-reporting company. Under most circumstances, the shareholders of private companies going public which have not filed a registration statement under the Securities Act must satisfy an extended holding period.
SEC Reporting Companies
If an issuer has securities registered under the Securities Act or the Securities Exchange Act of 1934 (the “Exchange Act”), has been subject to the SEC’s reporting requirements for at least 90 days prior to the time of sale and has filed all reports required by the Exchange Act during the twelve months preceding the sale or for such shorter period that the issuer was required to file reports its shareholders may Rely upon Rule 144 because the adequate current public information requirement has been met.
Non Reporting Companies In Going Public Transactions
If an issuer is a non-reporting company that complies with the informational requirements of Rule 15c2-11 of the Exchange Act then it has complied with the adequate current public information requirement.
Rule 15c2-11 l Going Public Transactions
Obtaining a ticker symbol from FINRA is the last step of a going public transaction. Rule 15c2-11 requires that the broker or dealer have specified information about an issuer in its records prior to entering quote information. The SEC has expressed that the requirements of Rule 15c2-11 will be met if the issuer disseminates such specified information to its stockholders, brokers, market makers and other market participants.
Rule 15c2-11 requires the following information be disclosed:
●The exact name of the issuer and its predecessor;
●The address of its principal executive offices;
● The state of incorporation, if it is a corporation;
●The exact title and class of the security being quoted;
●The par or stated value of the security;
●The number of shares or total amount of the securities outstanding as of the end of the issuer’s most recent fiscal year;
●The name and address of the transfer agent;
●The nature of the issuer’s business;
●The nature of products or services offered;
●The nature and extent of the issuer’s facilities;
●The name of the chief executive officer and members of the issuer’s board of directors;
●The issuer’s most recent balance sheet, profit and loss and retained earnings statements;
● Similar financial information for that part of the two preceding fiscal years as the issuer or its predecessor has been in existence;
● Whether the broker or dealer or any associated person is affiliated, directly or indirectly, with the issuer; and
● Whether the quotation is being submitted or published directly or indirectly on behalf of the issuer or any director, officer or other person, who is directly or indirectly the beneficial owner of more than 10% of the outstanding units or shares of any equity security of the issuer, and, if so, the name of that person, and the basis for any exemption under the securities laws for any sales of such securities on behalf of that person.