The rule that helped push Google (GOOG) to go public in 2004 won’t affect Facebook: It won’t have to disclose financial results after it hits 500 shareholders, BusinessWeek’s Spencer Ante reports. Which means it can keep hiring — and handing out equity — as fast as it can afford.
BusinessWeek: Under the Securities & Exchange Act of 1934, a private company must start disclosing financial results publicly once it has more than 500 stockholders and $10 million in assets. …
Facebook doesn’t have 500 shareholders yet, but it’s fast approaching that threshold as it hires new employees who often get equity in the company. In a letter written to the SEC obtained by BusinessWeek, lawyers from Facebook counsel Fenwick & West wrote that the company “anticipates that it could in the future have more than 500 holders” of restricted stock. In the 10-page letter, Facebook argued that there’s no need to meet the SEC disclosure requirements, since only insiders are getting the equity, and they’re not paying for it.
The lobbying worked. On Oct. 14 the SEC handed Facebook the exemption, according to a letter from the SEC’s Corporation Finance Div. obtained by BusinessWeek. Facebook will enjoy the exemption until the company goes public or is acquired or merged with another company.
Facebook could have 800 employees at the end of the year, up from 400 at the end of last year.
Meanwhile, no mention in Ante’s feature about CFO Gideon Yu’s supposed fundraising trip to Dubai — or anything about fundraising at all — despite access to Yu, COO Sheryl Sandberg, and investor Peter Thiel.
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