What is an Accredited Investor Questionnaire

In the U.S., investors are called upon to accredit themselves by filling out a suitable accredited investor questionnaire. The purpose of this type accredited investor questionnaire is to have the investor attest to being an accredited investor as specified by Rule 501(a) of the 1933 Securities Act Regulation D. Investment management companies typically compose their own accredited investor questionnaire, but all have in common certain features that gather the information necessary to satisfy Rule 501(a). Here is a rundown of the typical information that must be supplied by investors seeking accredited status.

Basic Identifying Data

You’ll start off giving your name, address, phone, email, etc. You will also indicate whether you are applying as an individual or as an investment manager.

Individual Investors

There are two tests that an individual (called a “natural person” to exclude corporations and partnerships) must meet in order to become accredited.

  1. The Net Worth Test: You alone, or in combination with your spouse, must have a net worth of at least $1 million. You cannot count the value of your primary residence towards this threshold. Furthermore, if your primary residence is “under water” – you owe more than the current sale value of the residence”, then the excess of the mortgage over the selling value must be deducted from your net worth.
  2. The Income Test: For individuals, the minimum acceptable income is $200,000 in each of the last two calendar years. For married couples, the minimum income figure is $300,000 per year. In all cases, the investors must attest their reasonable belief that they will once again earn the same level of income in the current year.

Institutional Investors

There are several different categories of institutional investors. Pick the one that pertains to your situation.

  1. Charities, Business Trusts and Partnerships: To meet this test as a charitable organization, you must qualify under Section 501(c)3 of the Internal Revenue Code. Otherwise, you must be a corporation, partnership or business trust in order to qualify. In any case:
    1. Your organization must have total assets exceeding $5 million.
    2. Your organization cannot be set up for the specific purpose of investing in the funds sponsored by the questionnaire provider.
  2. Employee Benefits Plans: To qualify, you must meet at least one qualifying condition for employee benefits plans as specified in Regulation D Rule 501(a).
  3. Personal Trusts: Your trust must have at least $5 million in assets, and cannot be formed for the purpose of investing in the funds offered by the questionnaire-giver. The investment manager must be a sophisticated person according to the definition found in the 1933 Act.
  4. SEC-Registered Organizations, Small Business Investment Companies, Insurance Companies and Bank: Each of these institutions is defined in applicable state or federal law, and must be licensed or supervised by a federal or state examining authority.
  5. An Organization Owned Entirely by Accredited Investors.

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