The “500-shareholder threshold” refers to a provision in U.S. securities law that triggers certain reporting and disclosure requirements for companies with a certain number of shareholders. Specifically, when a company exceeds 500 shareholders of record and has total assets exceeding $10 million, it is required to register its securities with the U.S. Securities and Exchange Commission (SEC) and comply with the reporting obligations outlined in the Securities Exchange Act of 1934.

Key points related to the 500-shareholder threshold include:

1. **Securities Exchange Act of 1934:**
– The 500-shareholder threshold is associated with Section 12(g) of the Securities Exchange Act of 1934. This section requires companies to register with the SEC if they meet certain criteria, including having a certain number of shareholders.

2. **Reporting Requirements:**
– Companies that exceed the 500-shareholder threshold are considered “reporting companies” under the Securities Exchange Act. As a result, they are required to file periodic reports with the SEC, including annual reports (Form 10-K), quarterly reports (Form 10-Q), and current reports (Form 8-K).

3. **Shareholders of Record:**
– The count of shareholders is based on the number of “record” shareholders, which are individuals or entities whose shares are registered directly in their names. Beneficial owners who hold shares through brokerage accounts are not typically included in this count.

4. **Total Assets:**
– In addition to the shareholder count, a company must have total assets exceeding $10 million to trigger the registration requirement. This threshold is designed to exempt smaller companies from the reporting obligations.

5. **Going Private Transactions:**
– Some companies may seek to go private to avoid the reporting requirements associated with the 500-shareholder threshold. Going private involves reducing the number of shareholders through share buybacks, mergers, or other transactions.

6. **Exemptions:**
– Certain exemptions and exclusions exist, allowing certain types of companies to avoid registration even if they surpass the 500-shareholder threshold. For example, companies may be exempt if their shares are held exclusively by qualified institutional buyers or if they meet the criteria for “emerging growth companies.”

It’s important for companies and investors to be aware of these thresholds and reporting requirements to ensure compliance with securities laws. Companies that find themselves approaching or exceeding the 500-shareholder threshold should carefully consider their options and legal obligations, and they may seek legal advice to navigate the regulatory landscape. Additionally, regulations and thresholds may be subject to change, so it’s advisable to consult current sources or legal professionals for the latest information.