In 2008, the Securities and
Exchange Commission (SEC) approved important changes to Rule 144 of the
Securities Act of 1933. The changes affected the holding period allowed for
restricted securities, covering securities of Exchange Act reporting companies
as well as non-reporting companies. In addition, the amendment reduced certain
other impediments to sales of restricted securities imposed by Rule 144.
Continental Stock Transfer & Trust Company is well versed in the associated
issues, and can provide invaluable help in releasing restrictions from
securities.
Continental’s legal counsel
participated in drafting the new Securities Transfer Association Guidelines
regarding implementation of these Rule 144 changes, providing critically
informed guidance for the company to establish the following procedures, which
cover restricted shares held more than 12 months, to reduce administration cost
and burden for clients.
• For restricted transfers/legend removals submitted by
non-affiliates who have held securities for more than 6 months and less than 12
months – Continental will continue to require legal opinions. However, such
opinions must include advice that the issuer is not a “shell corporation” as
defined under Rule 144 provisions and that the issuer is current in its
filings.
• For sales by non-affiliates who have held securities for
more than 12 months – Continental no longer requires opinions for such
restricted transfers/legend removals. Indeed, because the Release indicates
that the removal of legends is solely at the discretion of the issuer, the
company requires, in lieu of an opinion, direction from the client to be
executed by an authorized officer of the issuer. The Issuer Direction Form must
be submitted by presenting shareholders and/or brokers with their shares in
proper transfer order.
For more information, visit
www.ContinentalStock.com
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