PIPE Transactions

Historically, companies that were funded through a PIPE would register the shares so they would become freely tradable. The company would usually keep the registration statement effective until either the shares that were registered were sold or until such time as the shareholders could sell their shares without any restrictions under Rule 144.

There are some new twists to the rule. Previously, non-affiliates had a hold period one year. After the rule change, the hold period was reduced to six months but that only works if you purchased your restricted shares after the company becomes fully reporting and the company did not purchase a shell that was reporting as a “shell company”.

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Other posts of the serie

  1. Interpretation of Rule 144 – Part 1 - July 1, 2008
  2. Interpretation of Rule 144 – Part 2 - July 2, 2008
  3. Interpretation of Rule 144 – Part 3 (This post) - July 3, 2008
  4. Interpretation of Rule 144 – Part 4 - July 4, 2008