Rule 145
Rule 145 governs securities issued in business combination transactions (mergers, acquisitions, reclassifications), determining when a registration statement is required for shareholders receiving new securities.
Exam Tip
Rule 145 = M&A transactions requiring shareholder vote = registration required. Affiliates have same restrictions as Rule 144.
What is Rule 145?
Rule 145 addresses securities issued in business combination transactions such as mergers, consolidations, asset acquisitions, and reclassifications. It determines when such securities must be registered with the SEC.
Transactions Covered by Rule 145
| Transaction Type | Description |
|---|---|
| Merger | Two companies combine into one |
| Consolidation | Two companies form new entity |
| Asset Transfer | Exchange assets for securities |
| Reclassification | Change in rights/terms of securities |
When Registration Required
| Situation | Registration Needed? |
|---|---|
| Shareholder Vote Required | Yes - it's an "offer to sell" |
| Merger/Acquisition with Vote | Yes |
| No Shareholder Vote | Generally no |
Rule 145 vs. Rule 144
| Aspect | Rule 145 | Rule 144 |
|---|---|---|
| Focus | Business combinations | Restricted/control securities |
| When Applies | M&A transactions | Resale of private placement stock |
| Registration | May require registration | Safe harbor for resale |
Affiliate Restrictions Under Rule 145
Securities received by affiliates in Rule 145 transactions:
| Requirement | Detail |
|---|---|
| Holding Period | None specifically required |
| Volume Limits | Same as Rule 144 |
| Manner of Sale | Same as Rule 144 |
| Current Information | Required |
Non-Affiliate Treatment
Non-affiliates receiving securities in Rule 145 transactions:
- Can resell freely after 6 months (if issuer is reporting)
- No volume or manner of sale restrictions
- No Form 144 filing required
Registration Requirements
| Document | Purpose |
|---|---|
| Form S-4 | Standard registration for business combinations |
| Proxy Statement | Shareholder disclosure and voting |
| Joint Proxy/Prospectus | Combined disclosure document |
Exemptions from Rule 145
| Exemption | Condition |
|---|---|
| Small Offerings | Under $5 million |
| No Public Trading | Non-public companies |
| Certain Stock Dividends | No change in proportionate interest |
Study This Term In
Related Terms
Rule 144
SecuritiesRule 144 provides a safe harbor for selling restricted securities and control securities, specifying holding periods, volume limitations, and filing requirements for legally reselling these securities.
Securities Act of 1933
SecuritiesThe Securities Act of 1933 is the federal law requiring registration and disclosure for new securities offerings, ensuring investors receive material information before buying, often called the "Paper Act" or "Truth in Securities Act."