- December 5, 2012
- Posted by: John Fischer
- Category: Accredited Investors
Any company that offers or sells its securities, under the Securities Act of 1933 (SA-1933), must officially register those securities with the SEC, or they must find an exemption from the registration requirements. SA-1933 provides companies with a range of possible exemptions. For some of the exemptions, such as those listed in rules 505 and 506 of Regulation D, a company may sell its securities to what are referred to as an accredited investor.
The federal securities laws define the term accredited investor in Rule 501 of Regulation D as:
- A natural person must have experience in managing his personal portfolio.
- A bank, insurance company, registered investment company, business development company, or small business investment company;
- An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;
- A charitable organization, corporation, or partnership with assets exceeding $5 million;
- A director, executive officer, or general partner of the company selling the securities;
- A business in which all the equity owners are accredited investors;
- A natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million (not including their home) at the time of the purchase;
- A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
- A trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.
For more information please visit our mother site at Salesleads.tv