A Form 144, also known as a Notice of Proposed Sale of Securities, must be filed with the Securities and Exchange Commission (SEC) when an individual or entity who owns unregistered securities intends to sell those securities. The form is filed by an affiliate of the company when a sale is made in reliance on Rule 144 under the Securities Act of 1933.

Rule 144 under the Securities Act of 1933 applies when restricted securities or control securities are acquired. Restricted securities are unregistered securities acquired in a private transaction. Control securities are held by affiliates of the company, which includes executive officers, directors and large stockholders of the company.

A Form 144 only needs to be filed when the price of the shares being sold exceeds $50,000 or the sale exceeds 5,000 shares during any three-month period. The affiliate filing the Form 144 must sell the unregistered securities referred to in the Form 144 within a reasonable time after the filing. This generally means that the sale must occur within 90 days of the Form 144 filing.

Table I of the Form 144 requires furnishing information with respect to the restricted securities to be sold. Table II of the Form 144 requires furnishing information about restricted securities sold within the past 3 months.

In order for a holder of restricted or controlled securities to sell their securities, they must satisfy the applicable conditions under Rule 144. There are five conditions that must be met for the resale of restricted or controlled securities.

• Holding Period: In order to sell restricted securities, the required holding period must be satisfied. For a public company, the holding period is 6 months. For a private company, the holding period is 1 year.
• Current Public Information: There must be sufficient current information publicly available to investors, including an adequate business description, information about directors and executive officers, and financial statements.
• Volume Limitations: For an affiliate of the company, the number of equity securities that may be sold cannot exceed 1% of the total outstanding shares during any three-month period or 1% of the average reported weekly trading volume during the four calendar weeks preceding the Form 144 filing.
• Manner of Sale: Normal trading conditions must be met in connection with the sale of restricted or control securities. In particular, the broker cannot receive excessive commissions and cannot solicit orders to buy the securities.
• Filing of Form 144: A Notice of Proposed Sale of Securities on Form 144 must be filed if the price of the shares being sold exceeds $50,000 or the sale exceeds 5,000 shares during any three-month period.

In connection with the sale of restricted securities, the restrictive legend must be removed from the securities. A company’s transfer agent is responsible for removing the restrictive legend from the electronic, book-entry securities. Each transfer agent has their own internal procedures and requirements for legend removal. The major transfer agent companies used by large U.S. corporations include Computershare Limited, Continental Stock Transfer & Trust Company and Equiniti Trust Company.