The SEC's December 2007 Rule Revisions: Updates to Standard Transaction Documentation for Financial Intermediaries


As many of you are aware, the SEC passed a number of important rule revisions in December 2007, relating to:

Rule 144;

Form S-3/F-3 eligibility; and

reporting requirements of “Smaller Reporting Companies.”

We have summarized these revisions in our prior client alerts.[1] This alert is principally intended to remind our clients who act as financial intermediaries of the changes to their principal standard transaction documents and forms they might consider as a result of these amendments.

Summary of the Amendments

Rule 144. The amendments relax the restrictions of Rule 144 by:

reducing the current minimum holding period for restricted securities issued by reporting companies from one year to six months;

permitting persons who have been non-affiliates of the issuer for the past 90 days to sell unlimited amounts of restricted securities after a six-month holding period, as long as the issuer meets Rule 144’s current public information requirement, and to sell restricted

securities without any conditions after a one-year (as opposed to the prior two-year) holding period; and

eliminating the Form 144 notice requirement for sales by non-affiliates and increasing the thresholds that trigger the Form 144 filing requirement for proposed sales by affiliates.

Short Form Registration. As to Form S-3 and Form F-3, the amendments will enable a company that has less than $75 million in public equity float to register its primary securities offerings on one of the forms if it:

meets the other eligibility requirements of the relevant form;

is not and has not been a shell company for at least 12 calendar months prior to the filing of the form;

has a class of common equity securities listed on a national securities exchange; and

does not sell in a 12-month period more than the equivalent of one-third of its public float.

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Written by:


Morrison & Foerster LLP on:

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