Non-affiliate path

Rule 144 for non-affiliates: simpler rules, same restricted legend.

Most Rule 144 guidance focuses on affiliates — current officers, directors, and large shareholders — because their sale process is operationally complex. But a significant number of people holding restricted stock are not affiliates: former employees who left years ago, seed investors who hold a small position, consultants paid in shares, or directors who resigned. Their path under Rule 144 is materially different and, in most cases, considerably simpler.

This guide explains the non-affiliate path: what conditions apply, what does not apply, and what brokers and transfer agents will ask you to prove before they process the sale.

Are you an affiliate? The 90-day transition window

Under Rule 144, an "affiliate" is a person who directly or indirectly controls, is controlled by, or is under common control with the issuer.¹ In practice the SEC and brokers treat three categories as presumptively affiliate:

• Officers — executive officers as defined under Exchange Act Rule 3b-7 (president, VP, CFO, Secretary, principal accounting officer, and anyone performing a similar function).
• Directors — board members, including independent directors and advisory board members who exercise real control.
• 10% shareholders — holders of 10% or more of any class of voting securities of the issuer.

The key rule for departures: if you were an affiliate at any point within the past 90 days, you are still treated as an affiliate for Rule 144 purposes.¹ A VP who resigned two months ago must still comply with the full affiliate conditions — volume limits, Form 144, manner-of-sale, current public information. Only after 90 days have passed since your last day of affiliate status do the non-affiliate rules apply.

Holding period requirements for non-affiliates

Once you are clearly outside the 90-day window (or were never an affiliate to begin with), the conditions that remain depend on whether the issuer is a reporting company — one that files periodic reports with the SEC under the Exchange Act.¹

Reporting company (NYSE, Nasdaq, or Exchange Act reporting)

Non-affiliates selling restricted securities of a reporting company must satisfy both:

1. 6-month holding period — measured from the later of the acquisition date or the date of any prior transaction that reset the clock (e.g., option exercise, conversion).
2. Current public information — the issuer must be current on its Exchange Act filings (10-K, 10-Q) at the time of sale. If the issuer has missed a filing and is not current, you must wait until it catches up before selling under Rule 144.

After the shares have been held for 12 months, even the current-public-information requirement drops away. A non-affiliate who has held for one year can freely resell shares of a reporting company without any Rule 144 condition.²

Non-reporting company

If the issuer is not subject to — or is not current with — Exchange Act reporting, the holding period extends to 12 months before any non-affiliate resale is permitted under Rule 144. After that 12-month period the sale is free of all Rule 144 conditions.

What does NOT apply to non-affiliates

This is the part most people don't know. The following Rule 144 conditions are affiliate-only requirements. Non-affiliates are fully exempt from all of them:

A non-affiliate who has held shares of a reporting company for 8 months can sell any quantity, through any broker, in any number of transactions, with no filing requirement. The only condition still in play is that the issuer is current on its SEC reports at the time of sale.

Tacking: borrowing a prior holder's period

Tacking allows you to add a prior holder's holding period to your own, which can reduce or eliminate your wait. For non-affiliates this matters most when shares were received as a gift, through inheritance, or in a private transfer from another non-affiliate:

• Gift: The donee may tack the donor's holding period. A donor who held for 5 months + 1 month after the gift = 6 months total.
• Inheritance: Estate beneficiaries may generally tack the decedent's period.
• Private transfer from non-affiliate: If you purchased in a private transaction from a non-affiliate who held for investment purposes, you may tack their period onto yours.
• Conversion or exchange: Shares received by converting a convertible note or exchanging other securities of the same issuer generally tack from the original acquisition of the converted instrument.

Tacking is not available when you acquired shares from an affiliate (their period does not transfer), or when you purchased on the open market (no restricted-securities holding period to tack).

What a broker or transfer agent will ask for

Even if you meet all the conditions, the transfer agent holding the restricted shares and the broker executing the sale need documentation to remove the restrictive legend and process the transaction. For non-affiliates, this typically means:

1. Non-affiliate representation letter (affidavit) — a written statement that you are not and have not been an affiliate within the past 90 days, signed under penalty of perjury. Most brokers have a standard form. This is the key gate for non-affiliates.
2. Holding period evidence — purchase confirmation, grant agreement, or vesting schedule showing acquisition date and cost basis, sufficient to document the holding period.
3. Legal opinion or broker representation — some transfer agents require a written opinion of counsel (typically issuer's counsel or a securities attorney) confirming that the sale satisfies Rule 144 conditions. This is more common for non-reporting company shares or when the holding period is borderline.
4. Current public information confirmation — during the 6–12 month window, either the broker or you will need to confirm the issuer is current on its SEC filings. After 12 months, this step is no longer required.

The broker's restricted-stock or equity-compensation desk will typically walk you through their paperwork checklist. Issuers often have a designated transfer agent (AST, Computershare, Equiniti, etc.) whose specific requirements govern the legend removal.

Common scenarios

Former employee who left 18 months ago

You resigned from a company 18 months ago, held shares for 2 years total, and were never an officer or director — you held under 5% of the stock. You are a non-affiliate. The shares have been held well past 12 months. You can sell any amount, through any broker, with no volume limit or Form 144. You need a non-affiliate affidavit and holding-period documentation. The legend can be removed and shares sold.

Seed investor in a recently-public company

You participated in a seed round 3 years ago. The company IPO'd 8 months ago and is now listed on Nasdaq. You own 1% of shares outstanding — below the 10% affiliate threshold — and are not an officer or director. You are a non-affiliate. Shares have been held 3+ years. You can sell freely; the IPO itself did not reset your Rule 144 holding period (your original acquisition date controls). Non-affiliate affidavit required. No volume limits apply.

Director who resigned 6 weeks ago

You resigned from the board 6 weeks ago after 3 years of service. You are still inside the 90-day former-affiliate window. You must comply with the full affiliate conditions: volume limits, manner-of-sale, current public information, and Form 144 if the sale exceeds 5,000 shares and $50,000. At day 91 from resignation, the affiliate conditions no longer apply and you move to the non-affiliate path — but by then you should confirm your holdings are still under the 10% threshold.

Consultant paid in shares (non-reporting startup)

You received shares of a private company 14 months ago in exchange for advisory services. The company is not yet public and does not file Exchange Act reports. You are not an officer, director, or 10%+ holder. Non-affiliate, non-reporting issuer. You have passed the 12-month mark. You can sell freely under Rule 144 with no conditions — but as a practical matter, the market for private company shares is limited. If the company ever lists or goes public, the non-reporting 12-month period would already be satisfied.

Tax planning still applies

Rule 144 eligibility is a securities-law question. Tax treatment is separate. Even after the Rule 144 holding period is satisfied, the IRS long-term capital gains clock requires a distinct 12-month holding period under IRC § 1222 before preferential rates apply.

For 2026, the federal long-term capital gains rates are 0%, 15%, or 20% depending on income — compared to ordinary rates up to 37% on short-term gains.³ High earners also owe 3.8% NIIT under IRC § 1411 on capital gains above $200,000 (single) or $250,000 (MFJ).⁴

The two gaps where tax planning matters for non-affiliates:

• 6–12 month window: Rule 144 permits the sale (reporting company) but the IRS LTCG period has not run. Waiting a few more months can shift gains from ordinary income rates (~37%) to preferential rates (~20% + 3.8% NIIT), a meaningful difference on a seven-figure transaction.
• Year-end timing: Non-affiliates with no volume limits can choose to concentrate recognition into one year or spread across two. The choice of tax year can move gains into or out of a higher bracket or NIIT territory.

See the concentrated stock tax strategies guide for tools like DAFs, charitable remainder trusts, and exchange funds — strategies that are relevant for non-affiliates with large unrealized positions just as they are for affiliates.