How to Create an Accredited Investor Questionnaire

In order to stay in compliance with the SEC, most Reg D private offerings require the company to work with accredited investors that complete an accredited investor questionnaire. The SEC defines an accredited investor as someone who has made $200,000 as an individual and is likely to continue to do so or a couple that has made $300,000 combined.  Investors can also qualify by having a net worth greater than $1 million, excluding their primary residence.

As a compliance best practice, companies should require each investor to complete an accredited investor questionnaire prior to transferring any shares or finalizing the investment. This document should be kept on file in case the SEC ever launches an investigation.

There are two types of certification or questionnaires: self-certification and third party certification.  Investors participating in Reg D Rule 504, Rule 505, or Rule 506b can self-certify or complete a company provided form.  Investors in offerings using Reg D Rule 506c need to have their status certified by a third party like an attorney, CPA, or a company representative that has reviewed their financial documents.

If you are creating your own accredited investor questionnaire, here is what you need to include:

  • Statement of confidentiality.  Investors need to feel confident that you will not share their private financial information with anyone outside of company officers, or the SEC if required to do so.
  • Statement as to why the form is needed.  Disclose your offering type and any requirements placed on the company by the SEC that pertain to the specific document.
  • Why the investor is accredited.  Many companies elect to use system where all of the exemptions are listed out, and the investor simply checks the applicable box.
  • Type of investor.  There needs to be an area for the investor to identify if they are an entity, individual, or investing with their spouse.
  • How the investments will be held.  For example, individually, jointly with their spouse, or as tenants in common.
  • Statement of accuracy.  The investor must make a statement that the information they provided is true and accurate to the best of their knowledge.
  • Signatures.  Each investor needs to sign the certification.  If the investment is coming from an entity, it must be signed by an officer or employee with the ability to bind the company and must also contain a line for their title to be written.  If the investment is coming from a married couple, both people must sign the form.
  • Personal information.  The accredited investor questionnaire must contain personal contact information that includes:

o   The name of the investor (individual or entity)

  • If an entity, the name of the person binding the company and their title

o   Address, physical and mailing along with business address

o   Contact phone number

o   Email address

o   Spouse information (same as above)

o   If an entity is investing include:

  • State of organization
  • State of principal office
  • Contact person

When creating the accredited investor questionnaire create a separate document or additional for the verification process for offerings under Rule 506c.  Each financial item that an investor attests to needs to be verified unless they provide third party certification, which you can keep on file in its place.

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