What is an accredited investor?
As an individual, an accredited investor will have a net worth of at least $1 million or income in excess of $200,000 in each of the two most recent years and an expectation of earning a similar level in the upcoming year. As a corporation or entity, an accredited investor will have assets in excess of $5 million and not formed for the specific purpose of investing in a private partnership.
An accredited investor is: • a bank, insurance company, registered investment company, business development company, or small business investment company; • a charitable organization, corporation or partnership with assets exceeding $5 million; • a director, executive officer, or general partner of the company selling the securities; • a business in which all the equity owners are accredited investors; • a person with a net worth of at least $1 million; • a person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or • a trust with assets of at least $5 million, not formed to acquire the securities offered, and whose purchases are directed by a sophisticated person.
Presently, if you can meet one of the following criteria, you are an accredited investor: *You have an individual net worth, or you and your spouse have a combined net worth, in excess of $1 million. *You had individual income, excluding any income attributable to your spouse, of more than $200,000 in the previous two years, and you reasonably expect to do the same this calendar year. *You and your spouse had joint income of more than $300,000 in the previous two years and reasonably expect to do the same in this calendar year. Institutions and pension accounts are subject to more complex criteria, and should consult an accountant.
In the United States, an accredited investor is an individual or financial business entity that has been recognized by the Securities and Exchange Commission as meeting the criterion necessary to conduct investment transactions on a large scale. The SEC has established specific qualifications that must be met before the status of accredited investor is awarded. Here is more about what it takes to become an accredited investor in the United States. Accredited investors may be individuals, groups of individuals working together in legally instituted limited partnerships, or a financial institution. In order for an individual to attain the status of an accredited investor, he or she must have a net worth of over one million United States dollars (USD) at the time of the investment purchase. An alternative is to be able to demonstrate that for at least the past two years, individual annual income has exceeded $200,000.00 USD per year. In the event that a legally recognized couple sharing t
In the context of private placement offerings, investors are often categorized as accredited or non-accredited. The federal definition of accredited investors is contained in Regulation D. There are many categories of accredited investors, but the most widely applicable ones involve the net worth and income of an investor. An investor with a net worth of $1 million or more is an accredited investor. An investor reasonably expecting to earn at least $200,000 (or $300,000 jointly with spouse) in the current year and has done so the last 2 years, is an accredited investor. A non-accredited investor has a net worth and income under these thresholds. In most private placement offerings, an unlimited number of accredited investors can purchase an offerors security. Under federal regulations, except for Rule 504 of Regulation D, there can only be up to 35 non-accredited investors in an offering. Many state laws allow even less than 35 non-accredited investors in an offering.
