Regardless of market conditions, The New York Times suggests that Facebook may be forced to proceed with its initial public offering. “It just has too many shareholders,” NYT writes of the social network. “Securities regulation requires a United States company with 500 or more shareholders of record to begin filing reports, including audited financial information, with the Securities and Exchange Commission four months after the year it exceeds this threshold.”
Facebook most likely exceeded 500 shareholders this year. As such, by the end of April 2012, the company will most likely become subject to this heightened regulation and have to disclose a spate of confidential business information. How did Facebook paint itself into such a corner?
For one, longtime employees have been exercising their options and selling the shares in large quantities on private markets, NYT writes. Meanwhile, in January, Facebook arranged to sell $1.5 billion in shares through Goldman Sachs to new investors. “This offering appears to have pushed it over the line.”