Rule 144 Explained for Australians: 2025 Guide

Australian investors are eyeing US markets more than ever. With cross-border listings and global capital flows on the rise, understanding US securities regulations—like Rule 144—has become crucial for anyone holding or trading shares in US-listed companies. In 2025, some subtle but important shifts in the regulatory landscape make now the perfect time to brush up on what Rule 144 means for you.

What is Rule 144?

Rule 144 is a US Securities and Exchange Commission (SEC) regulation that governs the sale of ‘restricted’ and ‘control’ securities. Restricted securities are typically those acquired in unregistered, private sales from the issuing company or an affiliate. Control securities are held by affiliates of the issuing company, such as officers, directors, or large shareholders. The rule sets out the conditions under which these securities can be sold publicly, with the aim of protecting markets from sudden, large-scale share dumps that could destabilise prices.

Key requirements under Rule 144 include:

• Holding Period: Most restricted securities must be held for at least six months (for companies subject to SEC reporting) or one year (for non-reporting companies) before they can be sold.
• Current Public Information: Adequate information about the issuer must be publicly available, typically through regular SEC filings.
• Volume Limitations: Affiliates are restricted in the amount of stock they can sell within a three-month period, generally capped at 1% of the outstanding shares or the average weekly trading volume.
• Ordinary Brokerage Transactions: Sales must be handled as routine trading, not special deals.
• Filing a Notice: Affiliates must file Form 144 with the SEC if the sale exceeds 5,000 shares or $50,000 in any three-month period.

Why Rule 144 Matters for Australians

Many Australian investors and fund managers are increasingly exposed to US securities, whether through direct investments, dual-listed companies, or Employee Stock Ownership Plans (ESOPs) with US parents. Rule 144 is especially relevant if you:

• Hold restricted shares after a US company acquisition of an Australian business
• Participate in employee share schemes with US-listed parent companies
• Act as an affiliate (director, executive, or large shareholder) of a US-listed entity

In 2025, with several ASX companies seeking dual-listings on the NASDAQ or NYSE, Australian investors may find themselves holding restricted securities that are subject to Rule 144, even if they’re based locally. Failing to comply can result in blocked trades, regulatory penalties, or delays in accessing liquidity.

Example: An Australian biotech acquired by a US pharmaceutical company issues restricted shares to local founders. Those founders must now observe Rule 144’s holding and disclosure requirements before selling their stock on US markets.

2025 Policy Updates and What’s Changing

The SEC has made several updates impacting Rule 144 in recent years, with a focus on transparency and market integrity. While the core of Rule 144 remains unchanged, here’s what’s new and notable for 2025:

• Digital Form 144 Filings: As of mid-2023, Form 144 filings are now mandatory via the SEC’s EDGAR system, streamlining compliance but requiring digital literacy from non-US investors.
• Shortened Settlement Cycles: The US now operates on a T+1 settlement cycle, meaning trades settle one business day after execution. This affects the timing for both filing and executing Rule 144 sales.
• Increased SEC Scrutiny: Ongoing enforcement efforts mean that brokers and custodians are more diligent in vetting documentation for restricted stock sales. Expect more checks and longer lead times if paperwork is incomplete.
• Cross-border Tax Implications: With the ATO and IRS sharing more data, Australian residents selling US shares under Rule 144 should pay close attention to capital gains tax reporting and double taxation agreements.

These updates highlight the need for robust record-keeping and proactive communication with your broker or custodian, especially if you’re planning a significant sale.

Practical Tips for Australian Investors

• Check Your Status: Determine if you’re considered an affiliate of the US issuer, as stricter rules apply.
• Track Your Holding Period: Keep detailed records of acquisition dates and circumstances to avoid disputes over eligibility to sell.
• Engage With Your Broker Early: Not all Australian brokers handle US restricted securities—choose one with proven US market expertise.
• Stay On Top of Compliance: Prepare Form 144 filings and required supporting documents well in advance to prevent delays.
• Plan for Tax: Factor in both US and Australian tax implications before executing a sale, especially for large or complex holdings.

Being proactive can save you from unnecessary headaches—and help you unlock the value of your US-listed investments more efficiently.

Conclusion

Rule 144 may seem like a niche US regulation, but as global capital markets become more interconnected, it’s increasingly relevant for Australians with cross-border portfolios. Understanding the latest compliance requirements and market practices in 2025 is key to making smart, informed decisions about your US-linked securities.