Who is an accredited investor?
Regulation D under the Securities Act of 1933 define an accredited Investor as:
1) Is a natural person whose individual net worth, or joint net worth with that person's spouse, at the time of the purchase exceeds $1,000,000;
2) Is a natural person who had individual income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 in each of those years and has a reasonable expectation of reaching the same level of income in the current year;
3) Is a director, executive officer, or general partners of the company offering or selling the securities;
4) Is a business in which all the equity owners are accredited investors;
5) Is any organization with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities being offered;
6) Is any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities being offered, whose purchase is directed by a sophisticated person; and
7) Is a non-profit organization with assets in excess of $5,000,000.
Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements. The Act provides companies with a number of exemptions. For some of the exemptions, such as rules 505 and 506 of Regulation D, a company may sell its securities to what are known as "accredited investors."
Accredited Definition |