How many share holders total does Facebook have now? My gut reaction to hearing this was that perhaps they were nearing the limit where they would be forced to go public and that this might be a stop-gap so that they can time their IPO more conveniently.
No company if forced to "go public" by trading on a public exchange. But the Securities & Exchange Act of 1934 requires public disclosure of some financials after a company accumulates 500 shareholders and $10 million in assets.
The SEC granted Facebook an exception in November 2008 because many of the shareholders hold restricted stock. Read more below:
Based on the statement in the article that Facebook's common stock sale program allows employees to "sell up to 20% of their common share holdings", I don't think this is about reducing the number of shareholders. They'd need to allow employees to sell all of their shares if they wanted to reduce the number of shareholders.
