A US market watchdog plans to make it easier for private companies to issue shares, a move that could help start-ups get cash and recenter the stock market at the heart of business funding. In a recent letter to US lawmakers, the Securities and Exchange Commission said it plans to cut "unnecessary" and "superfluous" reporting requirements for companies hoping to tap public capital markets.
The move comes on the back of a furor over large private share sales by Facebook and Zynga, which called into question the stock market's role as the go-to place to raise capital. The new rules could make it easier for companies to get cash without becoming a public company, which entails - critics say - burdensome filing requirements. The SEC would ease the process for private firms to publicize share offerings and raise from 499 the number of shareholders they can have without having to open their books. The move would also allow fledgling companies to stay private but still raise funds by selling shares to more investors, rather than having to undergo an initial public offering of stock to the general public.
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