Rule 144 Chart: Affiliates, Holding Periods, and Volume Limits

A Rule 144 chart maps the safe-harbor conditions for reselling restricted or control securities onto the two variables that actually change the answer: whether you are an affiliate of the issuer, and whether the issuer files periodic reports with the SEC. Every other requirement in the rule — the holding period, current public information, volume caps, manner-of-sale rules, and the Form 144 filing — flips on or off based on those two facts.

Rule 144 Conditions at a Glance

Affiliate, reporting issuer. Six-month holding period. Current public information required. Volume limits apply. Manner-of-sale rules apply. Form 144 required above the filing threshold.
Affiliate, non-reporting issuer. One-year holding period. Current public information required. Volume limits apply. Manner-of-sale rules apply. Form 144 required above the filing threshold.
Non-affiliate, reporting issuer, held 6 to 12 months. Current public information required. No volume limits, no manner-of-sale rules, no Form 144.
Non-affiliate, reporting issuer, held 12+ months. No Rule 144 conditions. Sell freely.
Non-affiliate, non-reporting issuer, held 12+ months. No Rule 144 conditions. Sell freely.¹

To use the chart, you first need to know which row applies. That means settling your affiliate status, and then walking through each active condition. The rest of this article covers each row of the chart in turn.

Are You an Affiliate?

Rule 144 defines an affiliate as anyone who directly or indirectly controls the issuer, is controlled by the issuer, or shares common control with it.² In practice, the SEC treats directors, officers, and holders of roughly 10% or more of the shares as affiliates. The 10% figure is a factor, not a bright line; what matters is actual influence over the company.

The definition of “person” sweeps in more than you personally. It covers your spouse and any relatives living in your household, trusts and estates in which you and your household collectively hold 10% or more of the beneficial interest, and corporations where that same group holds 10% or more of the equity.² Their sales aggregate with yours for volume-limit purposes.

If you are not an affiliate and have not been one within the last three months, most of Rule 144 falls away once you satisfy the holding period.¹

Holding Period

The clock starts when you fully pay for the shares — not when you sign a purchase agreement, and not when a certificate arrives.³ The length depends on the issuer:

Reporting issuer: six months, provided the company has filed under the Exchange Act for at least 90 days before the sale.
Non-reporting issuer: one year.³

Tacking a Prior Holder’s Time

In several situations, you inherit the earlier holder’s holding period rather than starting over:²

Gifts from an affiliate: your period starts when the donor originally acquired the shares.¹
Conversions and exchanges: shares received in a swap of the issuer’s own securities inherit the surrendered securities’ holding period.
Pledged securities acquired on default: the period usually traces to the affiliate’s original acquisition, unless the pledge was without recourse, in which case it starts at the pledge date.
Trusts and estates: the settlor’s or decedent’s acquisition date carries through to the beneficiary.

What Non-Affiliates Get After the Holding Period

A non-affiliate holding reporting-company stock for between six and twelve months still has to meet the current public information requirement, but nothing else. After a full year, that last condition also falls away. For non-reporting stock, the non-affiliate waits the full year and then faces no further Rule 144 conditions.¹

Current Public Information

Rule 144 requires that adequate current information about the issuer be publicly available at the time of sale. What counts as “adequate” turns on issuer type.

For a reporting company, the issuer must have filed all required periodic reports — 10-Ks, 10-Qs, and similar filings — during the 12 months before your sale. Form 8-K reports are explicitly excluded from this list.³ The issuer must also have been a reporting company for at least 90 days.

For a non-reporting company, the issuer must make publicly available the categories of business and financial information described in Rule 15c2-11 — name, state of incorporation, financial statements, and similar disclosures.² Without that information, Rule 144 is not available.

Volume Limits for Affiliates

An affiliate can sell, in any rolling three-month window, no more than the greater of:²

1% of the outstanding shares of the same class, based on the issuer’s most recent report, or
the average weekly reported trading volume during the four calendar weeks before the Form 144 filing (or, if no filing is required, before the broker receives the sell order).¹

You take whichever is larger. For thinly traded stocks, the 1% figure usually controls. For actively traded exchange-listed stocks, average weekly volume tends to be more generous. Sales by every “person” aggregated under the rule — spouse, household relatives, family trusts, related entities — count against the same cap. Non-affiliates who have cleared the holding period are exempt from volume limits entirely.

Manner-of-Sale Rules for Affiliates

Affiliates selling equity must route the trade through one of three channels:²

A broker’s transaction, in which the broker acts purely as an agent, takes a normal commission, and does nothing to solicit buyers.
A direct sale to a registered market maker at the quoted price.
A riskless principal transaction, in which the broker buys and immediately offsets in the market at the same price, with any markup disclosed.

Across all three, neither you nor the broker can solicit orders to buy the securities, and you cannot pay anyone other than the executing broker in connection with the sale.³ The rule caps the broker’s compensation at the “usual and customary” commission rather than fixing a percentage. Debt securities are exempt from manner-of-sale rules entirely, as are sales from a decedent’s estate (or by a beneficiary) when neither is an affiliate.²

Form 144 Filing

Affiliates must file Form 144 with the SEC when sales during any three-month period exceed 5,000 shares or $50,000 in aggregate sale price.⁴ Below both thresholds, no filing is required. When a filing is required, it must be made concurrently with placing the sell order with the broker or executing directly with a market maker.⁵

The form reports the seller, the issuer, the class and number of shares, the aggregate market value, the broker or market maker, and the original acquisition date — the last is how the SEC checks the holding period. Missing or inaccurate information makes the safe harbor unavailable.⁴ Since April 2023, electronic filing through EDGAR has been mandatory when the issuer files reports under the Exchange Act; paper filing remains an option only for securities of non-reporting issuers.⁶

Shell Companies Fall Outside the Chart

Rule 144 is unavailable for securities originally issued by a shell company — a company with no meaningful operations and no assets beyond cash. A former shell can eventually qualify, but only after it stops being a shell, becomes a reporting issuer, files all required reports (other than Form 8-K) for the preceding 12 months, and files “Form 10 information” reflecting its new status. A full year must then pass from that Form 10 filing before Rule 144 becomes available — regardless of how long you personally have held the shares.³

Removing the Restrictive Legend

Satisfying Rule 144 is not the last step. Restricted shares carry a legend on the certificate or book-entry notation, and you cannot sell until the legend is removed. Only the issuer’s transfer agent can do that, and the transfer agent will typically act only on a legal opinion letter from the issuer’s counsel confirming that the conditions for removal have been met.⁷ Affiliates need a legal opinion letter whenever they sell, legend or not. Straightforward opinion letters typically cost between $425 and $575, more for complex situations.

If the issuer will not authorize removal, the SEC does not intervene. Legend removal disputes fall under state law, so the recourse is state court.⁷ It is worth checking an issuer’s track record on cooperation before assuming restricted shares are liquid.

What Happens If You Sell Without Meeting the Conditions

Selling restricted or control securities without satisfying Rule 144 (or another exemption) is a sale of unregistered securities in violation of Section 5 of the Securities Act.⁸ Buyers have a private right of action under Section 12: they can rescind the trade — returning the shares in exchange for the purchase price plus interest, less any income received — or, if they have already resold, sue for damages.⁹ The SEC also brings enforcement actions against sellers and, in cases involving baseless opinion letters, against the attorneys who signed them.

1
U.S. Securities and Exchange Commission. Rule 144: Selling Restricted and Control Securities
2
eCFR. 17 CFR 230.144 – Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters
3
eCFR. 17 CFR 230.144 – Persons Deemed Not to Be Engaged in a Distribution and Therefore Not Underwriters
4
eCFR. 17 CFR 239.144 – Form 144, for Notice of Proposed Sale of Securities
5
U.S. Securities and Exchange Commission. Final Rule: Extending Form 144 EDGAR Filing Hours
6
U.S. Securities and Exchange Commission. File Form 144 Electronically
7
U.S. Securities and Exchange Commission. Restricted Securities: Removing the Restrictive Legend
8
Office of the Law Revision Counsel. 15 USC 77e – Prohibitions Relating to Interstate Commerce and the Mails
9
Office of the Law Revision Counsel. 15 USC 77l – Civil Liabilities Arising in Connection With Prospectuses and Communications