New Rule Could Help Companies Stay Private Longer
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A newly proposed bill could allow private companies like Facebook to stay private longer, according to an article from Fortune.
Reps. David Schweikert (R-AZ) and Jim Himes (D-CT) plan to submit a bill to amend the Securities Exchange Act of 1934, which would expand the "500 shareholder rule" to 1,000 shareholders. In addition, the rule would exempt employees and accredited investors from being counted toward the 500 shareholder limit.
The article suggests that “Broadly-speaking” the new rule would “allow most any VC-backed private company to remain private indefinitely." This would not only be the case for large Internet companies like Facebook, but also IT and biotech companies.
Reps. David Schweikert (R-AZ) and Jim Himes (D-CT) plan to submit a bill to amend the Securities Exchange Act of 1934, which would expand the "500 shareholder rule" to 1,000 shareholders. In addition, the rule would exempt employees and accredited investors from being counted toward the 500 shareholder limit.
The article suggests that “Broadly-speaking” the new rule would “allow most any VC-backed private company to remain private indefinitely." This would not only be the case for large Internet companies like Facebook, but also IT and biotech companies.
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