November 08, 2013
Did Twitter's IPO have anything to do with 12(g)?
Posted by Usha Rodrigues

It's unlikely, but not impossible. Twitter was a big lobbying force for the JOBS Act provision that changed the Section 12(g) of the Exchange Act's threshold from 500 to 2000 investors.  And we know from this prospectus that it went public with 755 shareholders (p. 155) of record.  But 12(g) has a second threshold: you have to register under the Exchange Act if you have 500 or more unaccredited shareholders.  I was curious whether Twitter would break out the number of unaccredited shareholders in its prospectus, but it doesn't.  To be fair, I don't suggest it has to: the regulations don't require it, at least as far as I know.  

We know Twitter was approaching that magic 500 number when JOBS was passed, but JOBS changed the rules regarding counting: employee stockholders who gain their shares via vesting of stock options don't count in the tally.  Presumably once Twitter excluded these stockholders it was well under the 500 unaccredited threshold.  But it would be interesting to know.

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