ACCREDITATION
An accredited investor is an individual or entity that meets specific criteria set by regulatory bodies, qualifying them to invest in certain private securities offerings that are not registered. The criteria typically revolve around income, net worth, or professional experience in financial matters.
The requirement for accredited investor status to invest in private markets aims to protect less experienced investors from the higher risks associated with these investments. By demonstrating a certain level of financial sophistication or substantial wealth, accredited investors are deemed more capable of assessing and bearing the risks inherent in private market investments, such as venture capital.
Terminology for accredited investors varies significantly across jurisdictions. In the United States, individuals meeting specific financial benchmarks are deemed accredited investors, based on income or net worth. Other countries adopt different criteria and terminologies, such as the "qualified investor" designation in the European Union or the "sophisticated investor" classification in Australia, tailored to their respective regulatory frameworks. Below, you'll discover select criteria from prominent jurisdictions that qualify investors for participation in private markets.
Please note, this is not an exhaustive list, and the criteria may undergo updates periodically. It's essential to seek guidance from your CPA, lawyer, or investment adviser to comprehend the current criteria applicable in your jurisdiction before engaging in investment activities.
UNITED STATES OF AMERICA
Individual and Joint Account Accreditation
1. Net Worth: Individual or joint net worth (including assets held separately) exceeding $1,000,000, excluding the primary residence and associated debts.
2. Income:
- Individual income exceeding $200,000 in each of the past two calendar years; or
- Joint income with spouse or cohabitant equivalent exceeding $300,000 in each of the past two calendar years; or
- Expectation of individual or joint income meeting the above thresholds in the current calendar year.
3. Regulated Person: Hold one or more of the following licenses: General Securities Representative (Series 7), Private Securities Offerings Representative (Series 82), or Investment Adviser Representative (Series 65).
Entity Accreditation
1. Ownership: Wholly owned by Accredited Investors, including indirect ownership such as shareholders, unit holders, or limited partners of the entity.
2. Total Assets: Possess total assets exceeding $5,000,000; and not formed solely to acquire interests in OurCrowd opportunities (applies to corporations, partnerships, limited liability companies, business trusts, and non-profit organizations).
3. Investments: Own investments exceeding $5,000,000 (as defined in Rule 2a51-1(b) under the Investment Company Act); and not formed solely to acquire interests in OurCrowd opportunities.
4. Institutional and Regulatory Status:
- Bank, savings and loan association, or institution mentioned in Section 3(a)(5)(A) of the Securities Act, acting in individual or fiduciary capacity.
- Registered broker-dealer, registered investment adviser, or unregistered investment adviser relying on the Advisers Act exemption.
- Insurance company.
- Investment company, business development company, or Small Business Investment Company licensed by the U.S. Small Business Administration.
- Rural Business Investment Company.
- Plan established and maintained by a state, political subdivisions, or agency for employee benefits, with total assets exceeding $5,000,000.
- Employee benefit plan with investment decisions made by accredited investors or qualified fiduciaries.
- Private business development company.
- Family office meeting the specified criteria under the Advisers Act with assets under management exceeding $5,000,000 and not formed solely for acquiring OurCrowd interests (“Qualified Family Office”).
- Family clients directed by a Family Office as described above.
Trust Accreditation
1. Irrevocable Trust: Total assets exceeding $5,000,000; and directed by an individual with financial and business expertise to evaluate investment merits and risks.
2. Revocable Trust: The grantor or settlor of the trust is an Accredited Investor, regardless of the trust’s purpose.
AUSTRALIA
Individual Accreditation
1. Net Assets: You own net assets of at least AUD $2.5 million, which may include net assets of a company or trust under your control.
2. Gross Income: Your gross income for each of the last two financial years is at least AUD $250,000, which may include the gross income of a company or trust under your control.
Entity and Trust Accreditation
For corporate investors, the following criteria apply:
1. Control: The entity or trust is controlled by Australian Sophisticated Investors as defined in section 50AA of the Corporations Act 2001.
2. Gross Assets: The investor has or controls gross assets of at least AUD $10 million, including assets held by an associate or under a trust managed by the investor.
3. Superannuation Trustee: The investor is a trustee of a superannuation trust or scheme specified in section 9 of the Corporations Act 2001, with net assets of at least AUD $10 million.
4. Investment Company: The investor is an investment company that invests in financial products, interests in land, or other investments. The funds invested are received directly or indirectly from offers or invitations to the public, with terms that require the funds to be invested accordingly.
5. Financial Services Licensee: The investor is a financial services licensee.
6. APRA Regulation: The investor is a body regulated by APRA (excluding certain superannuation fund trustees).
7. Registered Body: The investor is a body registered under the Financial Corporations Act 1974.
8. Listed Entity: The investor is a listed entity or a related body corporate of a listed entity.
SINGAPORE
Individual Accreditation
1. Net Assets: Your net assets exceed in value S$2 million or its equivalent in a foreign currency. The value of your primary residence should be calculated by deducting any outstanding amounts of secured credit facility from the estimated fair market value, with the lower value considered between the calculated value and S$1 million.
2. Financial Assets: Your financial assets, net of any related liabilities, exceed in value S$1 million or its equivalent in a foreign currency.
Entity Accreditation
1. Share Capital: The entire share capital of the investor is owned by Accredited investors.
2. Partnership: The investor is a partnership (excluding limited liability partnerships) in which every partner is an Accredited investor.
3. Net Assets: The net assets of the investor (corporation) exceed in value S$2 million or its equivalent in a foreign currency.
4. Entity: The investor is an entity (other than a corporation) with net assets exceeding in value S$10 million.
5. Institutional Investor: The investor is an institutional investor, such as a bank, exchange, holder of a capital markets services license, recognized market operator, pension fund, collective investment scheme, etc.
Trust Accreditation
1. Beneficiaries: All the beneficiaries of the trust are Accredited Investors.
2. Settlors: All the settlors of the trust are Accredited Investors who have reserved to themselves (a) all powers of investment and asset management functions under the trust and (b) the power to revoke the trust.
3. Subject Matter: The subject matter of the trust exceeds in value S$10 million.
EUROPE
Individual Accreditation
1. Portfolio Value: You hold a portfolio of financial instruments worth more than €500,000.
2. Transaction Experience: You have carried out an average of at least ten transactions, in significant size, in unlisted shares per quarter over the previous four quarters.
3. Professional Experience: You have held a professional position in the financial sector for at least one year that required knowledge of investments in financial instruments.
Entity Accreditation
1. Portfolio Value: Your entity holds a portfolio of financial instruments worth more than €500,000.
2. Transaction Experience: Your entity has carried out an average of at least ten transactions, in significant size, in unlisted shares per quarter over the previous four quarters.
3. Professional Experience: Your entity has held a professional position in the financial sector for at least one year that required knowledge of investments in financial instruments.
4. Authorization or Regulation: Your entity is required to be authorized or regulated to operate in the financial markets in the EU. This may include being a credit institution, an investment firm, an insurance company, a collective investment scheme, or similar entities.
5. Government or Public Body: Your entity is a national or regional government, a public body managing public debt at the national or regional level, a central bank, or an international and supranational institution.
6. Institutional Investor: Your entity is an institutional investor whose main activity is to invest in financial instruments.
7. Does your entity meet at least two of the following requirements?
• have a balance sheet total of at least € 20 mln;
• have a net turnover of at least € 40 mln;
• own funds of at least € 2 mln.
CANADA
Individual/Joint Accounts Accreditation
1. Financial Assets: Beneficially own financial assets, either individually or jointly with a spouse, with an aggregate realizable value (net of liabilities) exceeding CAD $1,000,000.
2. Net Assets: Possess net assets, either individually or jointly with a spouse, of at least CAD $5,000,000.
3. Income:
• Have a net income before taxes of over CAD $200,000 in each of the past two calendar years; or
• Expect to have a net income exceeding CAD $200,000 in the current calendar year; or
• Combined net income before taxes with a spouse exceeds CAD $300,000 in each of the past two calendar years; or
• Expect combined net income with a spouse to exceed CAD $300,000 in the current calendar year.
Entity Accreditation
1. Ownership: All owners of interests, except required voting securities held by directors, are Accredited Investors, as defined above.
2. Net Assets: Possess net assets of at least CAD $5,000,000 based on the most recently prepared financial statements and not created solely for the purpose of purchasing or holding securities.
3. Registered Adviser or Dealer
4. Managed Account: Person acting on behalf of a fully managed account, provided the person is registered or authorized as an adviser or equivalent under Canadian securities legislation or foreign jurisdiction.
5. Investment Funds: Investment fund that distributes securities only to Accredited investors, or according to specific prospectus exemptions, or with a receipt from a regulator for a prospectus in Canada or advised by a registered adviser or exempt from registration as an adviser.
6. Trust Companies: Trust company or trust corporation registered/authorized under the Trust and Loan Companies Act (Canada) or similar legislation in Canada or a foreign jurisdiction acting on behalf of a fully managed account.
7. Financial Institutions: Bank, trust company, corporation, or insurance company or its 100% subsidiary.
8. Business Development Bank: Business Development Bank of Canada or its 100% subsidiary.
9. Schedule III Bank: Foreign bank conducting business in Canada or its 100% subsidiary.
10. Government Entities: National, territorial, or municipal government of Canada or a foreign jurisdiction; or a wholly owned entity of the Government of Canada or a Canadian jurisdiction; or a municipality, public board, or commission in Canada.
Trust Accreditation
1. Established by an Accredited investor, with the majority of trustees being Accredited investors; and
2. All beneficiaries of the trust are family members of the Accredited investor.