Rule 144 Opinion Letters
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We assist shareholders, stockbrokers and brokerage firms, corporate issuers,
corporate and inside counsel, insiders and affiliates and transfer agents/market makers, in facilitating
restricted stock transactions by providing prompt, efficient and cost-effective legal opinions necessary to
public sales of restricted securities pursuant to Rule 144.
If you are having difficulty obtaining a Rule 144 Opinion Letter for the sale of your restricted securities, contact us and we will provide all of the necessary forms by fax that will enable us to prepare an opinion for you. Upon request for a 144 opinion letter or 144k opinion, we will promptly collect information from shareholders, stockbrokers, issuers , transfer agents, etc., as necessary; respond to inquiries from all parties, and, if warranted by the facts, provide an accurate and timely opinion letter with an average turnaround time of 24 hours.
Our fee for a Standard 144 Opinion is $275 per certificate; our fee for a Standard 144K Opinion is $150 per certificate, and an amended opinion is $50 per certificate. In addition, we charge the costs of overnight delivery if requested. We will also assist in the preparation of Form 144 and other necessary paperwork if requested for an additional fee.
Notice: Our opinion only addresses the application of Rule 144 to a particular certificate and does does not attest to the viability of the issuer or the marketability of the shares, nor is an attorney-client relationship created with any party. Further, our opinion addresses only issues of federal securities law, and the issuer retains authority and control over the acceptance or denial of opinion.
We will respond quickly to phone and fax inquiries, please feel free to contact us. We will collect the necessary information, answer your questions, quickly prepare the required letters, and fax copies to ensure prompt completion of your transaction.
The Federal Securities Act of 1933 (the "Securities Act") generally requires that stock and other securities be registered with the SEC prior to their sale unless the transaction is exempt from registration. SEC Rules 144, 145 or 701, provide safe harbor exemptions from registration under the federal securities laws for persons selling restricted securities in public transactions and for affiliates (meaning individuals or entities controlling the issuer, controlled by the issuer, or under common control with the issuer) selling both restricted and unrestricted securities in public transactions.
Restricted securities are basically those which are first issued in a private placement exempt from registration and which bear a restricted legend. Securities which are acquired from the issuer or an affiliate in a transaction or chain of transactions not involving any public offering, are also deemed restricted securities for purposes of Rule 144, whether or not they bear a restrictive legend.
Basics of Rule 144
Rule 144 is used for sales of restricted stock by any person and for sales of restricted and non-restricted stock by an affiliate. The conditions which must be met to comply with under Rule 144 concern available information, the length of time the person has owned the securities, and the amount of securities sold.
First, adequate current public information regarding the issuer must be available. Generally, this requires the issuer meeting the reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act") for at least 90 days before the proposed sale and filing all required reports during the 12 months preceding the sale (or such shorter period that the issuer has been subject to filing requirements).
Second, generally, the securities must be fully paid for and beneficially owned for a period of at least one year prior to sale. There are extensive rules concerning when one may "tack" onto his own holding period the length of time a previous owner held the securities. The holding period requirement does not apply to affiliates selling unrestricted securities
Third, the amount of securities that may be sold under Rule 144 during any three-month period is the greater of 1% of the class of securities outstanding or the average weekly reported volume of trading in the securities during the four calendar weeks prior to the filing with the SEC of Form 144, Notice of Proposed Sale. It should be noted that there is no volume of trading reported on the OTCBB. In calculating the maximum number of shares that may be sold, the seller must deduct the number of shares he has sold, as well as the number of shares sold within the prior three months by (1) relatives who share the same household; (2) any trust or estate in which he owns or such relatives collectively own 10% or more of beneficial interest or serves as trustee, executor or similar capacity; (3) any corporation or entity in which he owns or such relatives collectively own 10% or more of the beneficial interests; (4) a party to whom he donated or pledged any such shares as a gift or in pledge for a loan; and/or (5) a party selling in concert with him her. Sellers acting in concert are treated as one in determining the number of shares that can be sold.
The sale must also be through a broker or market maker. A completed original and two copies of SEC Form 144 (Notice of Proposed Sale) must be mailed to the SEC at or prior to the time of placing the sell order. If the security is exchange-traded, a copy must also be filed with the principal exchange. A seller does not have to file a notice if within any 3-month period, he or she sells no more than 500 shares and the aggregate sales price does not exceed $10,000, however all other requirements of Rule 144 apply. The seller must have a "bona fide intent to sell" the securities within a reasonable time after the filing of the notice with the SEC. SEC rules require the shares be sold within 90 days of filing form 144.
Where the seller is not an affiliate of the issuer, has not been an affiliate during the preceding three months, and the securities were acquired from the issuer or any affiliate at least two years prior to the sale, then Rule 144(k) allows sales without reference to the public information requirement, volume limitations, and requirement that the sale be through a broker or market maker.
Rule 145 applies to securities received under a registration statement filed in connection with business combinations such as mergers, consolidations or transfers of assets (Rule 145 transactions). Unless the registration statement provides for resale by former control persons of the acquired company, such persons must sell in accordance with Rule 144, except that there is no holding period or filing of notice requirement
Rule 701 provides an exemption to the registration requirements of the Securities Act of 1933 for securities acquired from an issuer pursuant to certain compensatory stock benefit plans such as an incentive stock option plan. If the person holding the securities is not deemed an affiliate of the company 90 days after the issuing company becomes subject to the reporting requirement of the Exchange Act, securities issued under Rule 701 may be sold by that person without compliance with the current public information, holding period, volume limitations and notice of proposed sale requirements of Rule 144. If the person is deemed an affiliate of the issuer, he is only exempted from the holding period requirement and must meet all other conditions of Rule 144.