what is rule 10b 18 
rule 10b 18 is a securities and exchange commission sec rule that is intended to reduce liability for companies and their affiliated purchasers when the company repurchases shares of the company s common stock rule 10b 18 is considered a safe harbor provision a safe harbor is a legal provision to reduce or eliminate legal or regulatory liability in certain situations as long as certain conditions are met if the company abides by the four conditions of rule 10b 18 when it is repurchasing the shares the sec will not deem the transactions in violation of anti fraud provisions of the securities exchange act of 1934 understanding rule 10b 18rule 10b 18 provides information about the manner timing price and volume of repurchases by an issuer while compliance with the rule is voluntary if an issuer wants to reduce or eliminate their regulatory liability they must satisfy each of the four conditions daily otherwise repurchases will not fall under the safe harbor for that day the sec instituted rule 10b 18 in 1982 it was intended to help create a way for a company s board of directors to authorize the repurchase of a certain number of the company s shares in 2003 the sec amended the rule adding additional requirements for companies companies must now disclose more detailed information regarding share repurchases on additional sec filings including form 10 q form 10 k and form 20 f there are four conditions that must for met in order for a company or its affiliates to reduce liability when repurchasing shares of the company s stock first the issuer or affiliate must purchase all shares from a single broker or deal during a single day second there are certain requirements for the timing of the purchase an issuer with an average daily trading volume adtv that is less than 1 million per day or that has a public float value below 150 million cannot trade within the last 30 minutes of trading companies with higher average trading volume or public float value can trade until the last 10 minutes third the issuer must repurchase at a price that does not exceed the highest independent bid or the last transaction price quoted finally the issuer cannot purchase over 25 of the average daily volume in addition to meeting these four requirements companies are also required to disclose certain information quarterly on form 10 q and annually on form 10 k the company must provide a table showing several month by month statistics these statistics include although rule 10b 18 provides a safe harbor for companies as long as they abide by the rule s stipulations the company must also report all repurchases in compliance with the various regulations this safe harbor provision is not available if the company made repurchases in order to evade federal securities laws 