The Right Number of Shareholders for Your Company

There's no clear rule. But in certain circumstances, you'll be better off with 40, or maybe 35, or sometimes fewer than 10

With Facebook growing at a torrid rate, the private company has had to raise several rounds of capital as well as issue shares to its employees. As a result, the company has close to 500 shareholders. The problem? Once a company has more than 500 shareholders and $10 million in assets, an obscure Securities & Exchange Commission rule forces it to start filing as if it were a public company. So Facebook managed to get an exemption from the SEC.

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