Rule 144 is the SEC regulation governing how holders sell restricted stock and how company affiliates sell shares in the open market without full registration.

How it works

Restricted securities — typically private-company stock or unregistered public shares — require a minimum holding period (commonly six months for reporting issuers, twelve months for non-reporting) before resale under Rule 144.

Affiliates (directors, officers, large shareholders) face volume limitations tied to public float and must file Form 144 for sales above thresholds. Non-affiliates with fully satisfied holding periods may sell without volume caps.

Rule 144 operates alongside contractual lock-up periods from IPO underwriting — legal ability to sell does not mean underwriters permit it early.

Post-IPO, former private shares become tradable under Rule 144 mechanics once conditions clear; registered primary offerings follow different paths.

Why it matters

• Founders: Plan personal liquidity after lock-up expiry; coordinate with 10b5-1 plans and insider trading policies.
• Investors: Fund distributions and secondary sales in public portfolio companies depend on Rule 144 compliance.

Common mistake

Assuming IPO alone makes all shares freely tradable immediately. Lock-ups, Rule 144 holding periods, and affiliate limits can stagger sales for months after listing.

Related ideas

See also lock-up period, S-1, liquidity event, and registration rights.