Although the panel was expected to recommend easing the rule, it was unclear until Wednesday what number the panel would pick, and the choice was criticized by some members as premature.

The panel also offered up a surprise when it urged that the number of investors a company has exclude employees who own stock that can't yet be traded. That change would delay when a company crosses the threshold.

SEC Chairwoman Mary Schapiro has said she supports revising the 500 limit but has not indicated when the SEC will act on the advisory panel's recommendations.

Members of the Advisory Committee on Small and Emerging Companies suggested that the current 500 number, established in 1964, was outdated and that the two changes would offer temporary relief while the SEC more thoroughly reviewed its rule. While attention before the meeting and in Congress has focused on boosting the 500 number, committee members said the change in how employee stock is counted could also have significant effects in allowing companies to raise more capital before full SEC filings. A number of startups use the promise of stock in a future IPO as a recruiting tool.

The advisory committee, created last fall by Schapiro, also proposed several other alterations. At community banks, for instance, the SEC would increase the 500 number even further -- allowing them to have up to 2,000 investors before having to file. The number is consistent with legislation approved by the House of Representatives. The committee also proposed some changes to when companies that now have to file could abandon filing. Currently companies whose shareholder count drops below 300 holders may stop reporting. The committee recommended the number change to 500. Community banks with less than 1,200 holders of shares wouldn't have to report.

The recommendations came as committee chairman Stephen M. Graham, a partner at Fenwick & West LLP in Seattle, suggested that the current rules need to be more thoroughly reviewed, but that doing nothing wasn't an option.

"The 500 and 300 thresholds have been in place since 1964," he said. "Times have changed. I'm not sure what the right answer is, but I'm pretty sure what the wrong answer is."

Several members of the advisory committee questioned the wisdom of a specific number recommendation, and two members opposed the recommended changes.

Joseph Dennis, a partner at McGladrey & Pullen LLP in Bloomington, Minn., said he was concerned that the committee was making a specific recommendation even though the members don't know the number of companies that could be affected.

"I'm a little concerned on the definitive nature of the recommendation," he said. He called for the panel instead to recommend an easing to the SEC, but leave the exact change to the agency. Shannon L. Greene, CFO of Tandy Leather Factory Inc., also voted against the recommendation.

The panel decided to make no immediate recommendation on allowing crowdsourcing as a method for small companies to raise capital, amidst concerns that crowdsourcing pitches were more likely to be scams than ways for legitimate companies to raise capital.