Final answer:
The requirement not applicable to control stock when an officer or director wishes to sell is that it must be restricted stock because control stock can be either restricted or freely tradeable.
Step-by-step explanation:
Responding to the question of which requirement is not applicable for control stock when an officer or director wishes to sell, we can eliminate some options based on the conditions specified by Rule 144 of the Securities Act of 1933. Rule 144 stipulates the following:
- A 6 month holding period is one of the requirements for control securities before they can be sold.
- Form 144 filing must be submitted to the Securities and Exchange Commission (SEC) when planning to sell control stock.
- Rule 144 requirements, which encompass various other conditions such as trading volume limits and public information availability, must generally be met by officers or directors wishing to sell.
However, the concept of restricted stock specifically refers to securities acquired in unregistered, private sales from the issuing company, which are therefore restricted and not freely tradeable on the open market until certain conditions are met. Restricted stock is inherently different from control stock, which refers to the shareholdings of insiders with access to significant influence or control over the company. Therefore, it is not necessary for control stock to be restricted stock. Control stock can be either restricted or freely tradeable, depending on how and when it was acquired. Hence, the requirement explicitly not applicable to control stock when an officer or director wishes to sell is that it must be restricted stock.