ACCREDITED INVESTOR DEFINITION
What is an Accredited Investor?
Accredited Investors are individuals or entities that meet certain financial thresholds, making them eligible to participate in certain investment offerings not typically made available to the general public. This is a requirement set by the Canadian Securities Commissions and other regulatory bodies.
Canadian individuals qualify if any of the following apply:
- Individual income exceeds $200,000, or combined income with their spouse exceeds $300,000, in each of the past two years and the expectation to reach the same level this year;
- Individual financial assets, or joint financial assets with their spouse, exceeds $1 million (excluding the value of their principal residence and other real estate);
- Individual net worth, or joint net worth with their spouse, exceeds $5 million (including principal residence, real estate, and other assets).
Corporations and other entities can also qualify as Accredited Investors if any of the following apply:
- All of the owners of interests (direct or indirect) in the entity are Accredited Investors;
- If the entity had net assets of at least $5 million as reflected in its most recently prepared financial statements;
- If the entity invests a minimum of $150,000 in each transaction, as long as the corporation was not setup with the sole intention to invest in that specific transaction.
There are other ways persons can qualify but the above criteria are the most commonly used definitions to qualify as an accredited investor. If you are unsure whether you qualify, or if you'd like to learn more about ways other investors have met this criteria, please get in touch with our team.
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Exempt market investments are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. Investment products sold in the exempt market are generally considered high risk as they are not covered by deposit or investor protection insurance; regulators do not review any of the offering documents for completeness and, in jurisdictions where an Offering Memorandum is filed, Regulators may not review them for completeness or accuracy; issuers of exempt products are not subject to the same ongoing disclosure obligations as public issuers; many exempt products are not as liquid as publicly-traded securities; exempt products are often subject to a greater degree of “key person” risk than more widely held securities; they are purchased pursuant to an exemption from the usual protections accorded to investors in publicly-traded securities and under a prospectus offering; and there may be risks other than these related to the specific investments purchased. There can be no assurances that the investment will be able to maintain its net acquisition value or to produce projected income. Investment values change frequently and past performance may not be repeated.
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