Legal Opinions on the Resale of Securities: The Rule 144 Safe Harbor and Private and Public Resale Exemptions
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will discuss the preparation of legal opinions regarding resales of unregistered securities in the public markets relying upon the resale exemptions available under the federal securities laws, and, when available, the Rule 144 safe harbor. Section 4(a)(1 ½) and Section 4(a)(7) opinions regarding private secondary market resales will be discussed.
- Overview of exemptions from registration on the resale of securities
- Rule 144 (it is a safe harbor, not an exemption)
- Section 4(a)(1) and 4(a)(3) exemptions for public resales
- Section 4(1 1/2) and Section 4(a)(7) exemptions for private secondary market resales
- Opinions typically provided by shareholder’s counsel or issuer’s counsel regarding the availability of (1) an exemption under the federal securities laws to the requirement that shares must be registered for resale in a current and effective registration statement, (2) the Rule 144 safe harbor, and/or (3) a registration statement to permit a public or private resale of restricted stock
- Assumptions and qualifications contained in legal opinions: ABA opinion letter guidelines and recommendations of state bar associations
- Analysis of whether a seller acquired the shares with a view to distribution of the securities (holding periods), underwriter status, tacking of holding periods
- Due diligence: establishing that the shares were validly issued and fully paid, supporting the facts in your opinion with relevant documents, and analysis of corporate history and shell history
- Use of representations of the seller and buyer to provide solid support for Section 4(a)(1 ½) and Section 4(a)(7) opinions
- What essential opinions must be expressed in each letter? What are the necessary and acceptable assumptions and qualifications?
- Medallion Signature Guarantee programs seemed like a good idea at the time that they were adopted, but the arbitrary policies of some stock transfer agents and lack of availability of these guarantees have created nightmares for many shareholders
- Lost stock certificates--surety bonds, indemnification agreements
The panel will review these and other critical issues:
- What requirements must be met for a shareholder to use the Rule 144 safe harbor and the exemption under Section 4(a)(1) to clear the restrictive legend from and resell stock in the public markets that is not registered for resale in a current and effective registration statement?
- What requirements must be met for a shareholder to use the Section 4(1-1/2) and Section 4(a)(7) exemptions for private secondary market resales of stock?
- How can counsel use representations letters from the issuer of securities, sellers, and buyers to provide solid factual foundations for opinions?
- What assumptions and qualifications are necessary and appropriate in your opinion letters and what assumptions and qualifications should be rejected by the broker and stock transfer agent?
- What opinions must be stated regarding the circumstances of the issuer of the securities and the seller so that the seller, issuer, stock transfer agent, and the broker can reasonably rely on the legal opinion?
Branden T. Burningham
Burningham Law Group
Mr. Burningham has significant expertise in both registered and exempt offerings, including “PIPE”... | Read More
Mr. Burningham has significant expertise in both registered and exempt offerings, including “PIPE” transactions. He has a deep understanding of the Securities and Exchange Commission’s evolving positions on the registration and resale of “restricted securities" and rendering Rule 144 and Section 4(a)(1) legal opinions regarding the resale of restricted securities.Close
Ronald J. Logan
Logan Law Firm
Mr. Logan emphasizes representation of investors and emerging companies in his business transactions practice and has... | Read More
Mr. Logan emphasizes representation of investors and emerging companies in his business transactions practice and has over 40 years of experience in complex civil litigation. His practice emphasizes preparing restricted securities opinion letters and related restricted stock matters; preparation of business plans, marketing plans, analyst reports, and investor presentations; business transactions; corporate minutes, resolutions, and communications with stock transfer agents; employment and consulting agreements; acting as a consulting attorney in management disputes; and assisting attorneys for privately-owned companies in the process of going public. In 2002, Mr. Logan began writing restricted securities opinion letters for shareholders who held restricted stock in small public companies and had experienced difficulty finding an attorney to provide third-party legal opinions at a fair price. The firm has since become a leader in providing different types of restricted securities opinions for shareholders around the world.Close