Regulators may ease share issue rules: report

(Reuters) - U.S. securities regulators may ease constraints on share issues by private companies, making it easier for start-ups to raise money, the Wall Street Journal reported.

The steps under consideration would help privately held companies like Facebook Inc, Twitter Inc and Zynga Inc to raise more money without going through increased reporting and other requirements of becoming a public company, the report said.

Currently, companies can issue shares privately without incurring onerous reporting obligations if they have fewer than 500 shareholders. The U.S. Securities and Exchange Commission (SEC) is considering raising that limit, though it is unclear by how much, the Journal said.

The move could potentially delay or derail initial public offerings by technology companies that want to grow but would rather avoid having to disclose vast amounts of information, the report said citing an SEC letter to a lawmaker.

It could also shut out many ordinary investors from one of the fastest-growing market sectors, since shares in private companies are generally available only to investors whose individual net worth is at least $1 million.

The SEC could not be reached for comment outside of business hours.

(Reporting by Sweta Singh in Bangalore; Editing by Gopakumar Warrier)