Are Spun-Off Securities “Restricted Securities” Under Rule 144?
It is the Division’s view that securities received by shareholders in a spin-off that meets the conditions described in response to Question 4, above, generally are not “restricted securities.” 16 In rare situations, however, a large shareholder of the parent so controls the parent that the shareholder essentially decides whether to do the spin-off. In these infrequent situations, we view the spin-off as a privately negotiated transaction between the parent and that shareholder, with that shareholder getting restricted securities. 17 The other shareholders get securities that are not restricted.
