Accredited Investor

Definition:

As defined in Rule 501(a) of Regulation D. Accredited Investors include several categories of entities and individuals who are financially sophisticated enough or have a close enough relationship with the issuer to have a reduced need for the protections provided by the Securities Act and therefore may be offered securities pursuant to certain Private Placement exemptions provided in Regulation D. 

An individual qualifying as an Accredited Investor must have a net worth of at least US$1 million (not including the value of their primary residence, individually or with their spouse or partner) or have had an income of at least US$200,000 each year for the last two years (US$300,000 with their spouse or partner) and have the expectation of making the same amount in the current year or hold certain investment-related professional certifications or be a knowledgeable employee (as defined in Rule 3c-5 under the Investment Company Act) of a private fund. 

Major categories of other Accredited Investors include:

(1) any director, Executive Officer, or general partner of the issuer;

(2) any bank, savings and loan association, employee benefit plan, registered investment adviser, registered broker or dealer and insurance company;

(3) any Investment Company registered under the Investment Company Act;

(4) any entity owning “investments,” as that term is defined in Rule 2a51-1(b) under the Investment Company Act, in excess of $5 million that is not formed for the specific purpose of acquiring the securities being offered; and

(5) certain family offices and their family clients as defined under the Investment Advisers Act.

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