Rule 144A

Definition:

An exemption under the Securities Act from SEC registration for the resale of certain Restricted Securities to Qualified Institutional Buyers (QIBs). Amendments under the JOBS Act (July 2013) provide that offers of securities to persons other than QIBs, including by means of General Solicitation or General Advertising, are now permitted. However, the securities must still only be sold to persons that the seller and any person acting on behalf of the seller reasonably believe are QIBs.

Rule 144A is only available for resale transactions and therefore, as a technical matter, most Rule 144A transactions involve two steps. First, with respect to the sale by the issuer to the initial purchasers, issuers in Rule 144A transactions ordinarily rely on Section 4(a)(2) of the Securities Act. The initial purchasers subsequently rely on Rule 144A for the resale to QIBs.

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