LOS ANGELES–(BUSINESS WIRE)–Small businesses will have cheaper access to capital because this proposed change will vastly improve the liquidity of restricted stock, said securities law expert Nimish Patel, in reaction to today’s proposed changes to Rules 144 and 145 by the Securities and Exchange Commission.

If a proposed change in Rule 144 is approved, stockholders in certain types of investments whose sale is currently restricted will only have to retain their stock for six months, as opposed to the present 12 months. As a result, Patel estimated that the discount companies offer investors when they raise capital through the sale of these restricted securities, typically in private placements, will go from 30-50% below current market price to as little as 5%. “This change will put small businesses on a much more level playing field when it comes to vying for capital. It may actually change the rate at which they are able to grow and may change their whole decision when it comes to deciding on their optimal capital structure.”
Mr. Patel, a partner in the Los Angeles-based business and securities law firm of Richardson & Patel, noted that the change to Rule 144 will be the first time in a decade that the SEC has changed those restrictions for stockholders. “This has significant implications for small and emerging businesses that are accessing the capital markets through vehicles like reverse mergers, PIPEs and other means, because investors will no longer be tied to the stock for an extended period.”
Richardson & Patel, one of the nation’s fast-growing law firms, provides small and emerging companies with business-focused legal advice that combines its partners and associates unique mix of business acumen and legal knowledge. Mr. Patel, holds both JD and MBA degrees as well as his CPA license, In fact, Mr. Patel has presented proposed regulatory adjustments to the SEC.
His firm, Richardson & Patel has extensive experience in mergers and acquisitions IPOs, secondary offerings, PIPEs, and other financing and corporate restructurings governed by the SEC, as well as less regulated matters such as angel and venture financing.

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