Rule 144
SEC rule governing when and how restricted securities can be sold publicly.
Definition
Rule 144 is an SEC regulation that provides a safe harbor for selling restricted or control securities. It requires a holding period (6 months for reporting companies, 1 year for non-reporting), limits the volume of shares sold, requires current public information about the company, and mandates ordinary brokerage transactions. For startup employees, Rule 144 is most relevant after an IPO when selling shares that were acquired through exercising options.
Why it matters
After your company's IPO, Rule 144 determines when and how much of your stock you can sell. If you are an insider (officer, director, or 10%+ shareholder), Rule 144 imposes volume limits and filing requirements on top of any lock-up agreement.
Example
After a 6-month lock-up expires, a VP wants to sell shares. Under Rule 144, they can sell the greater of 1% of outstanding shares or the average weekly trading volume. With 100M shares outstanding, that is up to 1M shares per quarter.