SEC Rule 144 Restricted and Control Securities Resale Reference
Direct answer: SEC Rule 144 provides a safe harbor for reselling restricted and control securities without registration. Key holding period: 6 months for reporting companies (SEC-registered), 12 months for non-reporting companies. Control persons (affiliates) also face volume limits (1% of shares or average weekly trading volume, whichever is greater), manner-of-sale restrictions, and a Form 144 filing requirement for sales over $50,000 or 5,000 shares.
Rule 144 Requirements by Seller Type
| Requirement | Non-Affiliate (held 6+ months, reporting co.) | Non-Affiliate (held 12+ months) | Affiliate |
|---|---|---|---|
| Holding period | Satisfied (6 months) | Satisfied (12 months) | Must satisfy 6-month minimum |
| Current public information | Not required | Not required | Required |
| Volume limitations | None | None | 1% of outstanding shares or avg weekly trading volume (4 wks), whichever greater |
| Manner of sale | No restriction | No restriction | Brokers, direct with market makers, or certain riskless principal transactions |
| Form 144 filing | Not required | Not required | Required if sale >5,000 shares or >$50,000 in 3-month period |
Source: SEC: Rule 144 Final Rule (Release No. 33-8869). Last verified: September 2026.
Frequently asked questions
What are restricted securities?
Restricted securities are shares acquired in unregistered private transactions, including: (1) private placements (PIPE transactions, Regulation D offerings); (2) shares received as compensation (employee stock options exercised in private companies); (3) shares acquired from affiliates. Restricted shares bear a restrictive legend on the stock certificate or electronic record indicating they cannot be resold without registration or an exemption. Rule 144 is the primary exemption allowing resale without a new SEC registration. Restricted securities are common in startup/venture capital (founder shares, VC shares) and in executive compensation at public companies (RSUs, options).
Who is an affiliate under Rule 144?
An affiliate is a person who controls, is controlled by, or is under common control with the issuer. In practice, affiliates include: directors, executive officers, and 10%+ shareholders. Affiliates face stricter Rule 144 requirements than non-affiliates because they have access to material non-public information and their sales could signal insider information to the market. Importantly, former affiliates remain subject to affiliate restrictions for 90 days after losing affiliate status (e.g., after resigning as a director). Control securities (securities owned by affiliates) remain subject to Rule 144 volume and manner-of-sale restrictions regardless of how long they have been held.
What is a Form 144 and when must it be filed?
Form 144 is a notice to the SEC that an affiliate intends to sell restricted or control securities. Required when the proposed sale in any 3-month period exceeds 5,000 shares or $50,000 in value. The form must be filed concurrently with the order to sell (or before). It discloses: name of issuer, title/class of securities, amount to be sold, planned dates of sale, and the seller's relationship to the issuer. Form 144 filings are publicly available on SEC EDGAR and are watched by investors as signals of insider selling intentions. Form 144 is not required for ordinary investors who are not affiliates.