Twitter Investors, Including Employees, Can Only Sell 20% of Their Stock [REPORT]

In a move designed to forestall an IPO for as long as possible,Twitter has a rule barring any investor, including employees, from selling more than 20% of their stock, according to a report.

Twitter initiated the rule about a year ago, but it hadn’t been made public, according to CNNMoney. The guideline is somewhat controversial within the company and allegedly prompted Senior Technical Engineer Evan Weaver to resign last August.

According to the article, Weaver’s departure prompted an explanatory email to staffers from CEO Dick Costolo. The email outlined Twitter’s reason behind the policy: To keep to the SEC-dictated limit of under 500 investors. Beyond that number, Twitter would have to go public. “We don’t want to be public until we have very predictable quarterly earnings growth,” Costolo wrote in his August email, according to the article. “We’re not ready to be a public company for a couple years… There is one reasonable way to do this: Let everybody with vested common stock sell only some fraction of their shares,” Costolo added.

Twitter reps could not be reached for comment on the report.

Costolo’s stance on going public mirrors his other recent public statements. Like other social media firms, including, for a time, Facebook, Twitter appears to be holding off an IPO as a way of limiting outsider investors’ influence. That approach has hardly dimmed enthusiasm for the stock, though. Last March, Twitter’s valuationhit $7.7 billion on Sharespost, which trades shares on the secondary market.

Limiting shareholders means catering to deep-pocketed investors, including Saudi Prince Alwaleed bin Talal, who sank $300 million into the company in December. Like Facebook, Twitter has also stopped giving out stock to employees instead offering them restricted stock units (RSUs), which can only be converted to actual shares after an IPO or a corporate buyout, according to the report.

Image courtesy of Flickr, eldh