Facebook Could Be Forced to Go Public
Facebook could be forced to register as a public company four months after the end of its fiscal year in 2012, according to commentators who say the social networking site's latest round of investment, that values the firm at $50bn, is particularly significant.
Goldman Sachs led the fresh round of investment of $500 million. It was joined by Russian tech investment firm Digital Sky which put $50 million into the deal.
Goldman has structured the deal as a new investment product. Clients can buy a chunk of Facebook equity by investing at least $2m, and have to agree not to sell shares until 2013 and not to trade in secondary stock markets.
The deal has prompted scrutiny of the rules on US initial public offerings (IPOs). The securities and exchange commission (SEC) stipulates that firms with more than 499 shareholders must go public but Facebook was made exempt from this rule in November 2008 because, it said, most of its shareholders were staff.
It's not clear how many investors Facebook has, although it was rumoured there were around 200 in 2009, and analysts are now scrutinising SEC rules that state that companies can't create "special purpose vehicles" to get round the 499-shareholder threshold.
Some analysts have suggested the SEC could demand Facebook registers as a public company in a similar situation to that forced on Google in 2004.
Facebook's founder, Mark Zuckerberg, denies he has any plans to float the business.
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