WHAT IS AN ACCREDITED, PROFESSIONAL OR WHOLESALE INVESTOR?
An accredited investor is an individual or a business entity that is allowed to make investments that may not be registered with financial authorities. They are entitled to this privileged access by satisfying at least one requirement regarding their income, net worth, asset size, governance status, or professional experience.
Different jurisdictions tend to use different terms such as professional, accredited, wholesale or sophisticated investors.
The terms refer to investors who are considered to be financially sophisticated and have a reduced need for the protection provided by regulatory disclosure filings. Accredited investors include high-net-worth individuals (HNWIs), banks, insurance companies, brokers, and trusts.
In Australia, essentially everyone is a "retail investor" unless they satisfy one of the requirements to be classified as a "wholesale investor" under the Corporations Act 2001.
There are several circumstances in which someone may be considered a wholesale investor under the Act, with the most common being:
A person or entity has obtained an accountant’s certificate stating:
1. They have net assets of at least $2.5 million; or
2. They have a gross income for each of the last two financial years of at least $250,000.
OR
A person or entity is willing to invest $500,000 or more.
