There's a bill working its way through Congress which will loosen the rules requiring private companies to publicly disclose their finances.  Currently, once a private company reaches 500 shareholders, the company must begin to publicly disclose its financial and operating information, similar to a public company.  This rule has been around for many years, but is now under scrutiny as companies like Google, Facebook and Zynga reach this threshold.  These companies grant employees stock options, and under the existing rule the employees receiving these stock options are considered to be shareholders.  Thus as a private company grows and grants options to its employees, it may run afoul of the 500 shareholder rule and be forced to become a public company.

The legislation currently being proposed raises the 500 shareholder limit to 2000 shareholders.  Accredited (wealthy) investors and employees receiving options will count against this limit.

Here are some links to this story:
The Atlantic Wire:  http://www.theatlanticwire.com/technology/2011/11/lawmakers-sponsoring-very-facebook-friendly-bill/44748/
Fortune Term Sheet:  
http://finance.fortune.cnn.com/2011/11/08/ending-the-500-shareholder-rule/


The original purpose of the 500 shareholder rule was to force a company with 500 or more shareholders to publicly disclose its financials in order to provide the shareholders with information that they otherwise wouldn't have.  The basic tenets of the securities laws are disclosure and protection.  Accredited investors are deemed to be sophisticated and in need of less protection.  But employees and investors who are not accredited investors deserve disclosure and protection, which in my view should be purpose of the 500 shareholder rule.   Therefore I would argue that the 500 shareholder limit should remain, but accredited investors should be exempt from the rule.

Brad Feld, a Managing Director at Foundry Group in Boulder, Colorado, has an insightful posting on Patent Trolls on his blog FeldThoughts.  Here's the link:  http://www.feld.com/wp/archives/2011/11/another-day-another-patent-troll.html. Also, some of the comments posted to his blog present some interesting ideas for reform.

In a recent article in the San Francisco Chronicle "Google lawyer: Why the patent system is broken," Google's patent counsel discusses why he believes the system is broken.  Here's the link:  http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/06/BUQP1LQN3V.DTL


In an article by Timothy B. Lee on ars technica, he expands on the San Francisco Chronicle and offers some poignant insights on the matter.  Here's the link:  http://arstechnica.com/tech-policy/news/2011/11/google-microsoft-uses-patents-when-products-stop-succeeding.ars

A recent article in the Financial Times, "Venture Capitalists Count Costs of EU Diktats to Funds" discusses the impact of regulation, primarily Basel III and Solvency II, on investment in VC funds by pension funds, insurers and banks.  Here's the link (behind firewall):  http://www.ft.com/intl/cms/s/0/6440741e-ff2d-11e0-9769-00144feabdc0.html#axzz1cPLr2DFB.  

The article indicates that investment in European VC funds has fallen since the regulations have been implemented, but adds that other factors, such as poor returns for average funds and long holding periods, may have compounded the problem.  The article then discusses proposed regulations that might ease the problem.  Overall, I think this is a good read.