For a description of recent amendments to Rule 144, see Practice Note, Resales Under Rule 144: SEC Adopts Amendments to Rule 144. See also SEC guidance entitled Updating EDGAR Filing Requirements and Form 144 Filings A Small Entity Compliance Guide (Modified June 29, 2022).

Rule 144 under the Securities Act of 1933, as amended (Securities Act), is a safe harbor for resales of securities:

Under the Securities Act, all offers and sales of securities must be registered with the SEC unless an exemption applies. This principle applies to the resale of securities by investors, as well as to the issuer's original issuance. Most secondary sales of securities (for example, most stock trades made on stock exchanges) are exempt from registration under Section 4(a)(1) of the Securities Act. Section 4(a)(1) exempts from registration transactions by anyone other than:

While the definitions of issuer and dealer are fairly straightforward, the Securities Act's definition of underwriter is very broad. Underwriter is defined in Section 2(a)(11) of the Securities Act to mean any person that either:

Under this definition, it is possible for virtually any securityholder that resells securities it purchased from the issuer or an affiliate of the issuer in an unregistered transaction to be considered an underwriter. This concern is amplified when the securityholder is an affiliate of the issuer. Because of the close relationship between the issuer and an affiliated securityholder, it is considered more likely that the affiliate's resale represents the affiliate acting as a conduit for the distribution of the securities from the issuer to public investors, as opposed to simply monetizing the affiliate's investment.

However, if an unregistered resale is deemed not to involve a distribution of securities, the seller is not considered a statutory underwriter and may rely on Section 4(a)(1). If a securityholder resells its restricted or control securities in accordance with Rule 144, the resale is not considered a distribution, and, as a non-underwriter, the securityholder may rely on Section 4(a)(1). Rule 144 is commonly used for the resale of restricted and control securities. Once securities are resold under Rule 144, they are no longer considered restricted securities.

The resources in this toolkit are intended to assist counsel advising on Rule 144 resales by clarifying the requirements of Rule 144. This toolkit also includes standard documents that can be used as a starting point for counsel drafting documents required as part of executing a Rule 144 sale.