What is an Accredited Investor for Private Placements?

Accredited investors are specific institutions and individuals defined by the SEC rules who fall within the definitions at the time of the investment. Accredited investors include directors, executive officers and general partners of the issuer or an entity in which all of the equity owners are accredited investors. The definition also includes any individual who has a net worth of, including a spouse, that exceeds $1,000,000.00 but without taking into account the value of a primary residence, or an individual who made $200,000.00 in the prior two years, or joint income with a spouse exceeding $300,000.00 in the prior two year, with a reasonably expectation of making the same income in the current year.

If the investors in an offering are only accredited investors, no specific form of mandatory disclosure is required. However, disclosures must still be made to as necessary to comply with antifraud provisions of security laws.

In addition, accredited investors do not count toward the limit of investors when applicable under the SEC rules.

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