SEC Considers Decreasing Shareholder Threshold

This post will not apply to most of you. But if you’ve considered using a private placement memorandum and selling more shares to a large number of accredited shareholders at a lower price, you will find this of interest. And you don’t know what could happen for your company in the future, so it’s good to be aware. Tiffany C. Wright

How Many Investors Is Too Many?

The SEC is reconsidering the 500-shareholder threshold for when private companies must publicly disclose financial information.

May 17, 2011

Last January, following a $1.5 billion Goldman Sachs private placement, Facebook announced that it would start publicly disclosing its financials in 2012. The reason: the company expected to trigger the Securities and Exchange Commission’s long-standing requirement that private companies with 500 or more shareholders and over $10 million in total assets must file financial reports with the SEC.

Now, regulators are evaluating whether the 500-shareholder threshold is a deterrent to companies’ ability to access capital. At a hearing last week before the House Committee on Oversight and Government Reform on the dearth of initial public offerings, chairman Darrell Issa (R-Calif.) said his concern isn’t with the Facebooks of the world but with the smaller, privately held companies on track for an eventual IPO that need significant funding to grow in the meantime.

Read the rest of the article at


About Tiffany C. Wright - The Resourceful CEO

Tiffany C. Wright is the author of “The Funding Is Out There! Access the Cash You Need to Impact Your Business” and “Solving the Capital Equation: Financing Solutions for Small Businesses.” She is the founder of The Resourceful CEO, which helps owners of small/medium-sized businesses prepare their businesses for sale. Tiffany has an MBA from the Wharton School of Business, sits on non-profit boards and serves as a business mentor with the Cherie Blair Foundation.
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