Comment by ramanujan | Hacker News Reader

Comment by ramanujan | Hacker News Reader

This is a fantastic, precedent setting move and a response to the political sector's irrational laws (see: Sarbanes-Oxley). It was presaged by the DST style investments over the last few years, and we can only hope that more companies follow suit.

If you want to reduce speculation and uninformed trading, at least one way to do that is to give companies rights over who trades their shares and under what circumstances. You're not forced to sell your house to anyone, so why should you be forced to sell your company to anyone -- particularly day traders who will just introduce volatility and aren't in it for the long haul?

A long overdue organic reaction to the silly laws passed in the wake of the last financial crisis. No doubt we will see similar workarounds for the work of art that was "FinReg", though those workarounds may take the form of debuting on the Hong Kong Stock Exchange rather than the NYSE.

It's a little known fact, but Google also made use of certain legal workarounds to avoid going public for as long as possible (among other things, they split the company into two units of 499 people apiece, or so I recall).

While I get your point about volatility, I'm not so sure I agree with the idea that large companies ought to have absolute control over who owns their shares. That's fundamentally contrary to the idea of open markets, and sets up too much potential for abuse. It's not hard to envision a marketplace where pervasive use of this technique concentrates wealth even further than it already is.

> It's not hard to envision a marketplace where pervasive use of this technique concentrates wealth even further than it already is.

Don't see how that follows. If you are restricting the market to only a fixed number of sellers, you are leaving a potentially significant amount of money on the table.

You're doing that to prevent the abuse of your company's shares by investors, who generally have more money than you do.

Imagine if you didn't have the right to turn down a VC who only wanted to put in money once you got hot, and then came to your board meetings as a shareholder and caused problems. Or to be criminally responsible if an accountant somewhere in your organization makes an error. That's what it is to be a public company in the post-Sarbox/Finreg US. This is about protecting the entrepreneur, not about protecting the old money.

correct me if I'm wrong, but aren't they not forced to sell their shares to anyone? once they pass the 499 shareholder mark they have to disclose financial information, at which point most companies go public, but if they have enough interest from private investors, I don't believe they have to.

Companies can be forced to go public when they reach a certain size? What? Really?

Once a company has a certain number of shareholders (investors and employees with options, for example) then they are forced to complete a lot of the paperwork that makes being a public company so onerous. They are not forced to go public, but they are forced to pay the costs of being a public company whether or not they are actually traded on the open market.

Irrational laws for irrational investments.

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