Form 144: Notice of Proposed Sale of Securities

What is Form 144?

Form 144 is the notice filed with the U.S. Securities and Exchange Commission (SEC) when certain insiders propose to sell company securities. It is required under Rule 144 of the Securities Act of 1933 whenever proposed sales by an executive officer, director, or affiliate exceed 5,000 shares or $50,000 in market value within a three-month period.

Who must file

• Executive officers, directors, and affiliates of an issuer who plan to sell restricted, unregistered, or control securities.
• Filers must have a bona fide intent to execute the sale within a reasonable time after filing.

When and how to file

• Form 144 must be filed if proposed sales exceed 5,000 shares or $50,000 in any three-month period.
• Filing may be submitted electronically via the SEC’s EDGAR system or on paper.
• Filings can include contact details, an IRS number, payment information, and records of recent similar sales, if applicable.

Key Rule 144 conditions for resale

To rely on Rule 144 and sell without registration, sellers must satisfy several conditions:

• Holding periods:
• Typically six months for reporting (public) companies.
• Typically one year for non-reporting issuers.
• Adequate public information: Company disclosure must provide investors with sufficient information about the business, financial condition, and key officers.
• Volume limits for affiliates: Affiliated sellers are limited in the amount they may resell (commonly capped relative to outstanding shares).
• Normal trading conditions: Sales must not be part of manipulative or irregular trading practices.
• Transfer agent legend removal: A transfer agent must remove any restrictive legend from the securities before the resale.

Lock-up agreements (IPOs)

Underwriters commonly require insiders to sign lock-up agreements at an IPO to stabilize the market. Typical lock-up periods:
– Commonly 180 days after IPO.
– Can range from about 120 days up to 365 days in some cases.

Important related SEC forms

• S-1 / S-1/A — registration statements
• 10-K / 10-Q — annual and quarterly reports
• Form 4 — Statement of Changes in Beneficial Ownership
• Form 12b-25 — Notification of Late Filing
• Form 15 — Termination of Registration

Real-world example

On April 26, 2018, a company director filed Form 144 to propose selling 20,891 shares of common stock valued at approximately $686,896, with the sale to occur within a specified multi-week window. Such filings are publicly viewable on EDGAR.

Bottom line

Form 144 notifies the SEC and the market of proposed insider sales that exceed modest thresholds. It helps ensure transparency and compliance with Rule 144’s holding, disclosure, and volume conditions, while allowing certain resales of restricted or control securities without a registration statement. Electronic filing via EDGAR is common but not required.