Twitter Exempt From SEC Disclosure Rules for Companies With 500+ Employees

Twitter Inc. got a green light from U.S. regulators to issue restricted stock units without running afoul of a rule that requires public disclosure of financial information.

The San Francisco-based blogging company won relief from complying with a Securities and Exchange Commission rule that compels private companies with 500 or more shareholders to make certain disclosures. Twitter requested the exemption in August.

“The division will not object if Twitter does not comply with the registration requirements” of the 1934 SEC Act, with respect to issuing the restricted shares, Kim McManus, special counsel at the SEC’s Division of Corporation Finance, wrote in a Sept. 13 letter posted to the SEC website.

Closely held companies with fewer than 500 shareholders aren’t required to disclose financial data, such as revenue, profit, cash flow and debt. Before an initial public offering, that helps them pursue growth without the same degree of scrutiny directed toward publicly traded companies.

Some startups say the 500-shareholder rule is restrictive, and lawmakers have proposed raising the threshold to let firms with less cash expand by compensating employees with stock.

Facebook Inc. received a similar exemption in 2008, as did Zynga Inc. earlier this year.

Restricted stock units represent the right to a specified number of shares of common Stock in the future if certain conditions are met.

Matt Graves, spokesman for Twitter, didn’t immediately respond to a phone message seeking comment.

To contact the reporters on this story: Brian Womack in San Francisco at; Joshua Gallu in Washington at

To contact the editor responsible for this story: Tom Giles at Z US <Equity>

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