Clearing Firms Can Request Opinions Regarding the Issuer’s Non Shell Status Even if the Certificate is Without Restriction
Sometimes Shareholder already hold stock certificates with the restricted legend removed, so a typical 144 letter is not requested by a clearing firm. However, even when the cert appears free trading, sometimes the Issuer’s financials and filings are light on detail, leading some to question whether or not the Issuer is an undeclared shell. When this happens, Shareholder’s can obtain a Non Shell Opinion Letter from an experienced securities attorney, like those at OTCLawyers.com.
What is a Shell According to Rule 144?
Under Rule 144, a Company does not meet the definition of a “shell” if it has more than
- Nominal operations;
- Assets consisting solely of cash and cash equivalents; or
- Assets consisting of any amount of cash and cash equivalents and nominal other assets.
When a staff attorney or compliance specialist at a brokerage requests a Non Shell Opinion Letter, they are looking for specific details which demonstrate that the Issuer has an operating business and significant assets.
Not All Securities Attorneys Draft Rule 144 Non Shell Opinions
Not every securities attorney will be comfortable with drafting a Non Shell letter under Rule 144 if the Issuer’s filings show zero dollars on the balance sheet.
However, an experienced securities law firm like the Law Office of Matheau J. W. Stout, Esq. knows that sometimes Issuers hold significant assets that are not highlighted in their financials, but may be referenced within their disclosures, such as intellectual property, land, equipment, accounts receivable and leases.
Shareholders should consult with a securities attorney who is willing to research the Non Shell issue thoroughly, and who can document an OTC Issuer’s assets and operations in a detail Non Shell Opinion Letter.