As of October 2026, a public company usually issues shares to sellers under the private-placement exemption (Securities Act Section 4(a)(2), often through Rule 506(b) of Regulation D), so the shares are restricted and unregistered. Under Rule 144 the seller can generally resell after six months if the company reports to the SEC and is current, or one year if it does not, and after any lock-up ends. Shares of a current or former shell company face a stricter test under Rule 144(i). If the seller needs to sell sooner or in larger blocks, the company can agree to register the shares for resale.
The common route is the private-placement exemption in Section 4(a)(2) of the Securities Act, which covers an issuer's transactions that do not involve a public offering. Most small deals use Rule 506(b) of Regulation D as a safe harbor:
Rule 506(c) also exists for offerings with general solicitation, but every purchaser must then be accredited and verified. A seller of a private business is rarely solicited, so Rule 506(b) is the usual fit.
The shares issued are restricted. The company uses reasonable care to prevent a distribution: it asks whether the seller is buying for their own account, tells them in writing that the shares are unregistered, and puts a legend on the certificate or book entry.
Rule 145 treats certain mergers and asset transfers that need a vote of the target's holders as offers of securities, so they must be registered or exempt. Registration is usually on Form S-4. It adds cost and SEC review time. For a private owner who sells a business to a small public holding company, my view is that the exempt route is the normal path, because the number of sellers is small. A statutory exemption such as 4(a)(2) remains available.
Rule 144 is the usual way to resell restricted shares without registration.
A seller who receives a large stake in a small company can become an affiliate, so ask your lawyer whether that applies before closing.
Rule 144 is not available for an issuer that has no or nominal operations and assets, or that used to be such a shell. A former shell can fall back on Rule 144 only after it has ceased to be a shell, reports to the SEC, has filed all required reports for the prior 12 months (other than Form 8-K), and one year has passed since it filed Form 10 information. This matters most for holding companies that went public by reverse merger. Teamshares' 8-K includes Form 10 information because its SPAC was a shell, and it states that the company ceased to be a shell at closing.
They are contract terms, not securities-law rules. A lock-up bars sales for a set period, even if Rule 144 would allow them. A leak-out lets the seller sell a limited amount per period, often tied to trading volume. Buyers ask for them to protect the stock price, and sellers negotiate the length and the exceptions. There is no standard period. See how sellers who take stock get liquidity.
Yes. A registration statement can cover shares sold by holders other than the company on a continuous or delayed basis under Rule 415(a)(1)(i). Registered shares can generally be sold without waiting for a Rule 144 holding period, though a lock-up still applies. The company usually bears the cost, and the sellers' price protection depends on the contract. Teamshares' registration rights agreement requires commercially reasonable efforts to file one; an August 17, 2026 prospectus supplement to its Form S-1 resale prospectus covers 19,663,254 shares offered by selling securityholders.
Assumptions. A reporting holding company closes a deal on Friday, December 4, 2026, issuing 3,000,000 restricted shares to the seller. It has 40,000,000 shares outstanding and is current in its reports. The seller is an affiliate.
If the seller is not an affiliate, the volume cap does not apply, and the lock-up and trading volume set the pace. Registration for resale would let the seller sell after the lock-up without these limits.
Where these numbers come from: Section 4(a)(2) is from 15 U.S.C. 77d (Cornell LII copy). Rule 506 is from 17 CFR 230.506 (Cornell LII copy), Rules 502(b), (c) and (d) from 17 CFR 230.502 (Cornell LII copy) and the Form D deadline from 17 CFR 230.503 (Cornell LII copy). Rule 145 is from 17 CFR 230.145 (Cornell LII copy), Rule 415 from 17 CFR 230.415 (Cornell LII copy) and Rule 144 from 17 CFR 230.144 (Cornell LII copy). The Teamshares details are from the Teamshares Form 8-K dated June 18, 2026 and the Teamshares 424B3 prospectus supplement. The share counts and dates in the example are assumptions. Confirm with a securities lawyer.
Not always. Rule 506(b) allows up to 35 non-accredited purchasers who meet the sophistication test, but the company must give them disclosure, which adds work. Many buyers prefer accredited sellers.
Only if Rule 144 or a registration allows it. A lock-up is an extra limit; it does not replace the securities-law conditions.
No. Private shares usually have no market, so Rule 144 offers little. See why sellers prefer public stock.
See how a seller values being paid in stock in how you pay a seller with stock instead of cash.
Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.
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Meraki Dealmakers is a service of Meraki Partners, LLC.
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