Facebook has been granted an exemption by the Securities and Exchange Commission that allows the company to not comply with the same law that pushed Google into becoming a public company. The exemption, reported by Business Week today, was granted on October 14 and allows the company to continue to grant restricted stock to employees.
Under the law, a private company must disclose its financial information publicly once it hits $10 million in assets or 500 shareholders. But Facebook could be reaching the 500 shareholders threshold soon if it finds itself hiring new employees - and granting the stock incentive to new employees/shareholders. With the economy in its current condition, Facebook may identify new talent in Silicon Valley companies that are making cutbacks and laying off employees. In a letter to the SEC, the company argued that the SEC requirement wasn't necessary because the only ones receiving the equity are insiders and they aren't paying for it.
The SEC agreed.
The exemption gives Facebook quite a bit of flexibility as it continues on its track to grow the site. CEO Mark Zuckerberg has said that the focus is on growth, not a revenue strategy. The company was injected with a $240 million investment by Microsoft last year and, despite reports in TechCrunch that the company may soon need cash, the company has said it's financially stable.