Accredited Investor

For purposes of the SEC’s (www.practicallaw.com/resource.do?item=:44406208) rules and regulations, any person who meets any one of the following categories, or who the issuer of the securities reasonably believes meets any one of the following categories, at the time of the sale of the securities to that person:

  • Any director, executive officer, or general partner (www.practicallaw.com/resource.do?item=:44402398) of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer.

  • Any individual whose net worth, or joint net worth with that person's spouse, at the time of purchase exceeds $1 million. In calculating a person's net worth (the amount of assets in excess of liabilities):

    • The value of the person's primary residence is not included as an asset.

    • The amount of debt secured by the primary residence, up to its estimated fair market value, is not included as a liability, unless the person incurred debt within 60 days before buying securities in the unregistered offering for the purpose of buying those securities and not for buying the residence. In that situation, the amount of debt borrowed during that 60-day period must be included as a liability.

    • Any debt secured by the primary residence in excess of the estimated fair market value of the home is included as a liability.

    • These additions and subtractions to the definition of net worth do not apply to a person exercising a right to buy securities if the person held that right to buy those securities, as well as other securities of the same issuer, on July 20, 2010, and met the net worth test in effect at the time the person acquired the right.

  • Any individual who had an income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

  • Any bank; any savings and loan association, whether acting in its individual or fiduciary capacity; any registered broker or dealer; any insurance company; any investment company registered under the Investment Company Act of 1940 (www.practicallaw.com/resource.do?item=:44402843) or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the US Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of $5 million; or any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (www.practicallaw.com/resource.do?item=:44405117) where investment decisions are made by a plan fiduciary that is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5 million or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

  • Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

  • Any organization described in Section 501(c)(3) of the Internal Revenue Code (www.practicallaw.com/resource.do?item=:44401053), corporation, Massachusetts or similar business trust, or partnership (www.practicallaw.com/resource.do?item=:44406286), not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5 million.

  • Any trust, with total assets in excess of $5 million, not formed for the specific purpose of acquiring the securities offered.

  • Any entity in which all of the equity owners are accredited investors.

See Rule 501 of Regulation D (www.practicallaw.com/resource.do?item=:44404580) of the Securities Act (www.practicallaw.com/resource.do?item=:44404736).

For a standard form of a subscription agreement used in connection with an unregistered offering to accredited investors in reliance on Regulation D, see Standard Document: Subscription Agreement: Private Placement of Equity Securities (Regulation D) (www.practicallaw.com/8-504-1925).

{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247245010925", "objName" : "Accredited Investor", "userID" : "2", "objUrl" : "http://us.practicallaw.com/cs/Satellite/us/resource/0-382-3212?null", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-5a0fabd9:149649db140:2011", "analyticsSessionCookie" : "2-5a0fabd9:149649db140:2012", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }