Sophisticated Investor

The Corporations Act 2001 (Cth.) permits offers of investments to be made to persons defined as sophisticated, professional or experienced investors without the need for a prospectus or other regulated disclosure document.

Detailed below are the requirements for each classification as required under Section 708 of the Corporations Act 2001 (Cth.)

Sophisticated Investor

The most common method of satisfying the sophisticated investor rule is to provide an accountant’s certificate verifying that either:

  • You have net assets of at least $2.5 million; or
  • You have a gross income for each of the last two years of at least $250,000

The accountant’s certificate must be dated within the last 6 months.

Professional Investor

You can satisfy the professional investor requirement set out in section 708(11) of the Corporations Act 2001 (Cth) if:

  • You hold an Australian Financial Services License (AFSL); or
  • You have or control gross assets of at least $10m or more

To show that you are a professional investor you will need an AFSL number or proof of assets.

Experienced Investor

An AFSL licensee is satisfied on reasonable grounds as described in Section 708(10) and s761GA of the Corporations Act 2001 (Cth.) that the person to whom the offer is made has previous experience in investing in securities that allows them to assess:

  • the merits of the offer
  • the value of the securities
  • the risks involved in accepting the offer
  • their own information needs
  • the adequacy of the information given by the person making the offer

The AFSL must give the investor a written statement of the AFSL’s reasons for being satisfied as to those matters; and the investor must sign a written acknowledgement that the AFSL has not given the investor documents which would generally be given to a retail client.

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