How Do I Remove the Restricted Legend on Rule 144 Stocks?

The first step in removing the restricted legend from a stock certificate under Rule 144 is to contact a qualified securities attorney who has expertise in drafting 144 legal opinions.

Only the Issuer’s Transfer Agent can remove a restrictive legend from the cert, and usually cannot happen unless the Shareholder’s request is accompanied by a Rule 144 opinion letter from securities counsel.  Although the consent of the Issuer is helpful, it is not necessary, especially if the Issuer is uncooperative.

If the securities lawyer drafting the opinion is well known by the Transfer Agent due to having drafted 144 legal opinions many times in the past, and the requirements under SEC Rule 144 have clearly been met, the restricted legend can be removed even over the Issuer’s objection.

According to the SEC, removing the restricted legend can be “a complicated process requiring you to work with an attorney who specializes in securities law” and that is true.  However, for securities attorneys who frequently draft 144 legal opinions, like the Law Office of Matheau J. W. Stout, Esq., the turn around time for such a letter can be as little as one day if all of the shareholder’s documentation is presented at the outset.

Rule 144 Exemptions for Non Affiliates Selling Restricted Stock

Rule 144 Opinions Discuss Safe Harbor Requirements

Shareholders of restricted stock who are not Affiliates now, or for the past ninety (90) days can sell their restricted stock under Rule 144 if the stock has been held by the Shareholder for a minimum of one (1) year.

Rule 144 Is More Lenient on OTC Bulletin Board Companies That Provide Current Public Information

If the Issuing Company of the stock is subject to the Exchange Act reporting requirements (typically reporting by posting regular filings, and listed on the OTC Bulletin Board, NASDAQ, etc) and the Shareholder has owned the stock  for at least six (6) months but less than one (1)  year, the SEC allows the Shareholder to sell the restricted stock, provided that the Company has satisfied the requirement to provide current public information to investors.

This requirement is researched by a securities attorney when drafting a 144 opinion letter and companies that file the typical 10-Q, 10-K and 8 reports with regularity and on time for the year prior to the Shareholder’s proposed sale of under 144 generally meet that requirement