Under Section 5 of the Securities Act of 1933 (Securities Act), any offer or sale of securities must either be registered with the Securities and Exchange Commission (SEC) or qualify for an exemption from registration. Rule 144A is a non-exclusive safe harbor from the Securities Act registration requirements that permits persons other than the issuer to resell eligible securities to qualified institutional buyers (QIBs).

Because it is a resale safe harbor, Rule 144A is not available for direct sales from the issuer to investors. Instead, a Rule 144A offering is structured as a two-step transaction:

The Rule 144A safe harbor provides that resales of securities made in compliance with Rule 144A do not constitute a "distribution" of the securities under the Securities Act. Therefore, the initial purchasers are not deemed to be "underwriters" under Section 2(a)(11) of the Securities Act, and they may rely on the registration exemption provided by Section 4(a)(1) of the Securities Act, an exemption for resales by anyone other than an issuer, underwriter, or dealer.

Rule 144A sets out certain securities and investor eligibility requirements and other conditions that must be met for an offering to qualify for the safe harbor. Rule 144A is available for resales of eligible debt and equity securities of any issuer that satisfies the conditions of the safe harbor (except certain issuers registered or required to be registered under the Investment Company Act of 1940).

QIBs that purchase securities in a Rule 144A offering may freely resell those securities without registration to other QIBs in the US under Rule 144A or in offshore transactions in compliance with Regulation S.

This Toolkit offers resources to help issuers, initial purchasers, and their counsel through the steps of a Rule 144A offering, from the kick-off meeting to post-closing.