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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 CFO.com.

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About Tiffany C. Wright

Hi! I,Tiffany C. Wright, am the author of the ebook, "Help! I Need Money for My Business Now!!" and the book "Solving the Capital Equation: Financing Solutions for Small Businesses", available on Amazon. I am the president of Toca Family Business Services, a short-term & project-based interim management & strategic and financial advisory firm, located in Atlanta, Georgia. In the past five years I've helped small and medium companies restructure and obtain over $31 Million in financing and a similar amount in purchase orders and contracts. I have an MBA in Finance and Entrepreneurial Management from the Wharton School of Business at the University of Pennsylvania and a B.S. in Industrial and Systems Engineering from The Ohio State University. Personal: I enjoy investing. I am a prodigious reader of everything from business books, magazines, and newspapers to horror and popular fiction. I read 4-6 books per month. I also love to travel. I've been to 33 countries on 5 continents and lived in Japan for 2.5 years and aim for a foreign locale twice a year. I am also an athlete and run track on the Master's Circuit. The highlight was placing 7th in my age group in the 2007 World Master's Track and Field Championships in Italy.

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The Resourceful CEO, Tiffany C. Wright

the president of Toca Family Business Services, a strategic and financial advisory firm which provides short-term & project-based C-level management. She is the author of Solving the Financial Equation: Financing Solutions for Small Businesses, available on Amazon.

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