Facebook has raised $500 million from Goldman Sachs and a Russian investor at a $50 billion valuation. The investment raises the question of whether Facebook will have to file public disclosures with the Securities and Exchange Commission (SEC) under the 500 shareholder rule. Managing the number of shareholders is an important corporate governance issue for...
Initial public offerings (IPOs) for small companies are exempt from full registration with the Securities and Exchange Commission (SEC) under certain conditions. Section 3(b) of the Securities Act of 1933, also known as Regulation A, allows a modified SEC registration for public offerings that are less than $5 million over a twelve month period. Under...
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), effective July 21, 2010, immediately impacts private placements of securities under Regulation D. Dodd-Frank makes important changes to key aspects of Regulation D, including the definition of "accredited investor" and restrictions on private securities sales by "bad boys." In our last post, we discussed the...
If you're a private company, how can you use Regulation D to sell your securities to VCs or angel investors without going public or registering your securities with the Securities and Exchange Commission (SEC)? Private companies, whether startups or more established companies, can offer and sell their securities through a private placement. Companies can use...
Many entrepreneurs dream about taking their company public through an initial public offering (IPO). Whether you issue securities in a public offering under the Securities Act of 1933 or register the company's securities under the Securities Exchange Act of 1934 (Exchange Act), your company will inherit public company disclosure requirements. Before becoming a public company,...
In my last post, I discussed Facebook's new stock trading policy that restricts when and how employees can sell company stock. This raises the broader question of what private companies should do when employees sell stock. In this post, I discuss (1) why private companies and startups should be concerned when their employees sell company...
Facebook just took another move to avoid going public. Late last week, Facebook implemented a policy that prohibits employees from selling their company stock unless a trading window is in effect, or from tipping outsiders on inside company information. In doing so, Facebook is reducing the risk that it will trigger Securities and Exchange Commission...
The Securities and Exchange Commission's (SEC) new disclosure rules mandate disclosure of material adverse risks created by compensation policies. A prominent corporate attorney's recent analysis of compensation program design and risk focuses on process, but completely ignores reputation risk. Reputation risk based on the amount of compensation, regardless of adherence to established procedures, is "reasonably...
Whether or not climate change is real, pressure from investors and regulators may lead companies to increase their SEC disclosures about climate change risk and cap and trade financials. What types of disclosures should investors get? How might the recent cap and trade legislation affect SEC disclosures about carbon and climate change risk? What are...
What are the the proper limits of shareholder proxy access? Proposed Exchange Act Rule 14a-11 creates a direct right of access for shareholders to the company’s proxy to nominate board members. For large public companies, a nominating shareholder or group that beneficially owned at least one percent of the company's shares for at at least...