Rule 144 Restricted & Control Stock — Q&A

Stock not registered with regulators (e.g., via Reg D private offering). Must be held 6 months before resale under Rule 144.

Any officer, director, or 10% shareholder. ⚠️ Shares of immediate family members (including spouses) may be combined — someone may be an affiliate even if their individual stake is below 10%.

Affiliates may sell the greater of (1) 1% of outstanding shares or (2) the four-week trading average, and may do so four times per year.

Both — 6-month holding period (restricted) and volume limitations (control/affiliate). When both conditions exist, both sets of requirements apply simultaneously.

When any investor (affiliate or non-affiliate) intends to trade control or restricted stock in the next 90 days. ⚠️ Triggered by intention, not actual transaction. De minimis: not required if selling ≤ 5,000 shares AND ≤ $50,000 total value.

Form 144 = intent to sell control/restricted stock (next 90 days); affiliate or non-affiliate. Form 4 = affiliate actually trades control stock (beneficial ownership change); filed within 2 business days. Both filed on EDGAR.

Sales to a Qualified Institutional Buyer (QIB) — institution with $100M+ investable assets — are exempt from Rule 144 (no 6-month hold, no volume limits).

To prevent affiliates from dumping large positions and putting downward pressure on the stock price. A 51% holder liquidating all at once could crash the market — like flooding a store with inventory.