Ever since Facebook’s remarkable round of fundraising and approximated $70 billion valuation earlier this year, IPO rumors have been swirling. And an SEC regulation that requires businesses with more than $10 million in assets and over 499 shareholders to go public seemed to set a 2012 Facebook IPO in stone. The rule didn’t mean that Facebook would have to publicly sell off its shares but that it would have to allow access to its currently confidential financial documents and corporate infrastructure. But now it seems like a for-sure Facebook IPO may be off the table as the SEC considers adjusting this regulation.
According to Fortune, an amendment may be drafted so that companies wouldn’t be forced into filing their S-1 form until they reach 1,000 shareholders. This means Facebook (and a handful of other companies, including the likes of Zynga) would have considerable more time to enjoy its private status before turning itself over to the public eye. To put off an IPO date even longer, the proposed bill wouldn’t consider employees shareholders (as it currently does). This would dramatically reduce the number of SEC-recognized shareholders and could effectively postpone public filings indefinitely, in theory. Taking things even further, accredited investors would also be exempt from the shareholder count–this means VC firms, mutual funds, and even people who are worth more than $1 million when they invest. Family and friends would still be included in that 1,000-limit count though.
The expanded shareholder limit and editing who is and isn’t considered a shareholder would make a significant difference when it comes to IPO filings, not to mention how companies choose to sell their shares. If a business plays its cards right, it could stay private forever – or at least be the one calling the shots and effectively taking a considerable amount of control away from the SEC.
Now the question is whether this will change Facebook’s IPO plans. It’s remarkably fast growth over the last year (despite those current whispers about losing users) has made it difficult for the company to stay private much longer, but that was according to the old rules. Facebook even admitted it “expects to start filing public financial reports no later than April 30, 2012.” But if these SEC regulations are amended, will it reconsider? Best case scenario, the bill wouldn’t be enacted for months yet, but it seems safe to say Facebook may have more options than we thought.
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