539.01 A holding company reorganization was to be carried out pursuant to Section 251(g) of the Delaware General Corporation Law and would not trigger a shareholder vote or appraisal rights. The reorganization was linked to an acquisition transaction with a third party (i.e., its consummation was a condition to closing with respect to the acquisition agreement). The purpose of the reorganization was to obtain more favorable tax treatment for the acquisition. When viewed together with the acquisition, the overall transaction changed the nature of the shareholders’ investment. Therefore the reorganization would involve a “sale” or “offer to sell” for the purposes of Securities Act Section 2(a)(3) and Rule 145. [Jan. 26, 2009]

539.02 A change from business trust status in one state to corporate status in another state would not be within the change of domicile exception of Rule 145(a)(2) because of the significant change in organizational structure that will occur. [Jan. 26, 2009]

539.03 Statutory mergers by means of security holders’ vote are defined by Rule 145(a)(2), for purposes of Section 2(a)(3), as events of sale. The rule excludes from this definition mergers for the sole purpose of changing the issuer's state of incorporation. The exclusion itself is limited to migratory transactions occurring exclusively within the United States, from one state to another. Despite the rule’s express domestic limitation, similar transactions changing a foreign issuer’s domicile from one political subdivision of a country to another (such as reincorporation from one Canadian province to another) likewise should not be treated as a sale. However, if a non-U.S. corporation undertakes a merger to incorporate within the United States, the migratory transaction is an event of sale that must be registered with the Commission or exempt from registration. [Nov. 26, 2008]

539.04 Item 17(b)(7) of Form S-4 states generally that the financial statements of acquired companies that were not previously Exchange Act reporting companies need be audited only to the extent practicable, unless the Form S-4 prospectus is to be used for resales by any person deemed an underwriter within the meaning of Rule 145(c), in which case such financial statements must be audited. The Division staff was asked whether a resale pursuant to Rule 145(d), in lieu of the Form S-4 prospectus, would require the financial statements to be audited. The Division staff noted that Rule 145(d) is not included in the Instruction to Item 9.01 of Form 8-K regarding sales pursuant to Rule 144 during the 71-day extension period for filing financial statements. As the audited financial statements for the acquired company would be required pursuant to Item 9.01 of Form 8-K, a resale pursuant to Rule 145(d) would not be permitted until they are filed. [April 2, 2008]

539.05 A proposed Rule 145 merger is submitted for a vote of shareholders at an annual meeting at which directors are also to be elected. Incumbent directors would be deemed “underwriters” with respect to the securities issuable in the merger transaction for purposes of paragraph (c) of Rule 145, even though they are not candidates for reelection. [Jan. 26, 2009]

539.06 A former affiliate of a shell company that was acquired in a registered Rule 145 transaction received four percent of the outstanding shares of the acquiring company. Although Rule 145(d)(2)(i) would permit the former affiliate to sell publicly one percent of the outstanding shares every three months, the former affiliate wishes to sell the entire four percent in a single transaction. The former affiliate (who is not an affiliate of the acquiring company) was advised that Rule 145(d) did not preclude a private sale of the entire amount, but the buyer in any such private transaction would have to step into the shoes of the seller and comply with Rule 145(d) in making public resales of the securities. [Jan. 26, 2009]

539.07 A person subject to Rule 145(c) converts preferred stock received in a Rule 145 transaction into common stock. Such person may tack the holding period for the preferred to that of the common in determining eligibility to use Rule 145(d)(2) to the extent permitted by Rule 144(d). [Jan. 26, 2009]

539.08 A partnership distributes restricted shares of shell company A to its partners, X and Y. X and Y hold enough shares of A to be deemed to be affiliates. Consequently, when corporation B later acquires shell company A, and the shares of A are exchanged for shares of B, the two partners must sell their shares of B pursuant to Rule 145(d), as Rule 145(c) applies because A is a shell company. However, they need not aggregate their sales for purposes of the volume limitation of paragraph (e) of Rule 144, except to the extent that they are acting in concert or are the same person for purposes of Rule 144. [Jan. 26, 2009]

539.09 An affiliate of company A acquires securities of company B in a Rule 145 transaction. The affiliate gives some of those securities to a charity, and then — some time later — becomes an affiliate of B. Although such affiliate must now sell B shares pursuant to all the provisions of Rule 144 since such person is an affiliate of B, the charity can continue to sell pursuant to the provisions of Rule 145(d), to the extent Rule 145(c) applies. [Jan. 26, 2009]

539.10 X acquires stock in a registered Rule 145 offering, but is subject to the resale restrictions of Rule 145(d) because X is an affiliate of the acquired company and Rule 145(c) applies. Pursuant to and on or subsequent to the date of a court-approved divorce settlement, X transfers some of the shares to spouse Y who is not an affiliate. The shares are not subject to resale restrictions in Y’s hands because Y is not subject to the Rule 145(d) restrictions and the resale status of a spouse receiving securities in a divorce proceeding under these circumstances will be determined by the status of Y and not by the status of X. [Jan. 26, 2009]

539.11 Less than six months after a Rule 145 transaction, a person deemed to be an underwriter by Rule 145(c) dies. The estate of the 145(c) underwriter may in general sell publicly in the same manner the decedent could have, that is, under paragraphs (c), (e), (f), and (g) of Rule 144, which apply due to Rule 145(d)(2)(i). If the estate is not an affiliate of the issuer, it will be able to sell subject only to the current public information requirement in Rule 144(c) because of the relief provided to unaffiliated estates by Rule 144(e) and Rule 144(f). [Jan. 26, 2009]