SEC Rule 145 and 701 Opinion Letters

Rule  145

Rule 145 Securities are shares which were received by affiliates of an issuer that went through a merger, acquisition or other consolidation.

Rule 145 stock typically needs to be sold under the same public information, volume limitations, and sale requirements of Rule 144 for at least one year, but are not subject to the holding period or Form 144 filing requirement.

Rule 701

Allows private companies to offer and sell their securities to employees, directors, and consultants under a written benefit plan.  Rule 701 Securities do not need to be registered with the SEC.  Rule 701 stocks are also restricted securities.

If the issuer later goes public, then the securities may be resold by non-affiliates after ninety (90) days, subject to the same sale requirements under SEC rule 144.   Affiliates who sell Rule 701 securities must meet the same requirements that apply to the resale of non-restricted control securities.  Rule 701 requires you to sell your stocks to remove the restrictive legend from the certificates.

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