Help Is On The Way
The New York Times' Business Section this morning had a piece about an upcoming federal rule change (
click here to read; registration required) that could help software start-ups and other channel companies raise money. Called the U.S. Securities and Exchange Commission's Rule 144, it covers restricted securities, which are sold at a discount in private placements.
Under the old language, investors had to hold those securities for a year and could only sell a set percentage of them each quarter after that. The revised rule, announced in mid-November, will allow investors to sell the securities all at once and after just six months. When it takes effect on Feb. 15, the new language will apply to publicly traded companies with less than $700 million in revenues.
According to one lawyer specializing in securities law quoted by the Times, the change will probably bring the most benefit to companies with a market capitalization of less than $100 million. The article also suggests it's good timing for smaller companies with the tightening of the credit markets.
Posted by Scott Bekker on January 30, 2008