Facebook is seeking to expedite the payout of its Instagram acquisition before the deal closes by using an obscure Californian law to issue stock without registering it with the Securities and Exchange Commission.

The tactic is intended to save the company time and money as it issues shares once valued at $700 million (€570 million) to Instagram’s 12 employees and early investors in the photo-sharing application.

Those shares are now worth $478 million, with Facebook’s stock price down 45 per cent since it began trading in May.

By going through the state of California rather than the federal government, Facebook may also insulate the deal from scrutiny regarding Facebook’s flawed public offering.

“They have other issues with investors,” said Brian Quinn, a professor of law at Boston College who follows such cases. “This takes all the Instagram issues and puts it in a box. It’s a cleaner process given everything else that is going on.”

Facebook has scheduled a “fairness hearing” with the California Department of Corporations for August 29th. –(The Financial Times Limited)