Accredited Investor Equivalents by Jurisdiction

United States

[1] An accredited investor satisfies one or more of the conditions below:

  • An individual whose income exceeds $200,000 in each of the two most recent years (or $300,000 in joint income with a person’s spouse) and who reasonably expects to reach the same income level in the current year;
  • An individual whose net worth exceeds $1 million, excluding value of primary residence;
  • Certain entities with over $5 million in assets; or
  • Certain regulated entities such as banks, savings and loan associations, registered broker dealers, insurance companies, registered investment companies, business development companies, licensed Small Business Investment Companies which are not subject to the asset test.

Canada

[2] Accredited investor

  • An individual who, alone or together with a spouse, owns financial assets worth more than $1 million before taxes but net of related liabilities; or
  • An individual who, alone or together with a spouse, has net assets of at least $5,000,000;
  • An individual whose net income before taxes exceeded $200,000 (or $300,000 in joint income with a spouse) in both of the last two years and who expects to maintain at least the same level of income this year;
  • An individual who currently is, or once was, a registered adviser or dealer, other than a limited market dealer;
  • Financial institutions, governments and governmental agencies, insurance companies, pension funds, registered charities, certain mutual funds, pooled funds, and managed accounts; or
  • Companies with net assets of at least $5 million.

EU & Norway 

[3] Professional client 

  • Per Se Professional Client
  • Elective Professional Client
    • The “Qualitative Test”: The firm undertakes an adequate assessment of the expertise, experience and knowledge of the client that gives reasonable assurance that the client is capable of making his own investment decisions
    • The “Quantitative Test”: Client meets at least two of the following:
      1. has carried out transactions of significant size on the relevant market at an average frequency of 10 per quarter over the previous four quarters
      2. has financial portfolio exceeding EUR 500,000
      3. works or has worked in the financial sector for at least one year
    • The client must state in writing that it wishes to be treated as a professional client and the firm must give the clear warning of the protections that client may lose

Switzerland

Consult with local counsel.

Singapore

[4] An accredited investor satisfies one or more of the conditions below:

  • An individual whose net personal assets exceed S$2 million;
  • An individual whose income in the preceding 12 months exceeds S$300,000; or
  • Corporations with assets exceeding S$10 million.

Israel

[5] Classified Investors

  • Institutional investors (pension funds, insurance companies, mutual funds, banks, portfolio managers, etc.);
  • Large companies with equity exceeding ILS 50 million; or
  • Sophisticated individual investors that:
    • Hold liquid assets (cash, deposits, financial assets, and securities) of at least ILS 8 million; or
    • Have received personal income of at least ILS 1.2 million in each of the two most recent years (or ILS 1.8 million in joint family income); or
    • Hold liquid assets of at least ILS 5 million and receive personal annual income of at least ILS 600,000 (or ILS 900,000 in joint family income).

China

[6] What constitutes a public offering in China

Under Chinese law, there is no exemption available for any PRC institutional investors, accredited investors, or qualified investors from seeking an approval from the China Securities Regulatory Commission (CSRC) in connection with any public offerings of securities in China. Under the PRC Securities Law, each of the following is generally considered a “public offering” and, therefore, will be subject to the CSRC’s prior approval:

  • offering securities to unspecified persons;
  • offering securities to 200 or more specified persons in aggregate; or
  • other activities related to securities offerings as prescribed by PRC laws and regulations.

Currently, it is not legally possible for any foreign-incorporated entity, such as Toniic, to seek an approval from the CSRC in order to make any public offering in China. Based on Chinese Securities Law and our experience in China, we recommend the following approaches to mitigate risks relating to a public offering of securities in China:

  • Marketing, offering, or selling any interests to no more than 200 Chinese specified potential investors;
  • Making communications and holding any in-person meetings only with specified potential investors;
  • Communications and in-person meetings should take place on a one-to-one basis in private places without utilizing any of the general advertising, general solicitation, or other disguised public dissemination methods prohibited by the Securities Law;
  • Marketing activities should generally be restricted to a limited number of prospective clients that are believed to be sophisticated institutional investors or high net worth individuals. Unsolicited communications with prospective PRC investors should be avoided to the extent practicable;
  • Any overview materials or offering documents sent to the previously identified PRC investors should be sent to their personal addresses or electronic mails, and should indicate that the materials may not be copied or distributed to persons other than the party to whom they are addressed;
  • In case any PRC investors have any affiliates or trustees outside the PRC, addressing the offering and sale documents to their overseas affiliates or trustees would be recommended to the extent applicable;
  • Investment documentation should be governed by laws of a jurisdiction other than the PRC and should provide for a non-PRC forum for resolving disputes; and
  • Subscription funds should be received by the fund sponsor in an account outside the PRC, and the execution of the investment documentation and completion of the transaction should take place outside the PRC.

Laws regarding Chinese outbound investments

In addition to rules surrounding public offering, PRC laws regulate Chinese outbound investments. PRC laws and regulations have not provided the specific procedures for Chinese individual investors to make their investments in any non-financial entities incorporated outside China. As a result, currently only Chinese corporate investors may be able to invest in a foreign enterprise.

Outbound investments in non-financial enterprises outside China by Chinese corporate investors normally require prior approvals from, and/or filing with, several competent governmental authorities in China. Typically, an outbound transaction must be approved by, or filed with, the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), and State Administration of Foreign Exchange (SAFE), or their local counterparts. If State-owned enterprises are involved, the approval of the State-owned Assets Supervision and Administration Commission may also be required.

  • NDRC Approval/Filing: If the proposed investment does not involve any “sensitive countries or regions” or “sensitive industries” [1], a Chinese corporate investor should file a record-filing application with the NDRC or its provincial branch depending on the total investment amount. It takes seven business days for the applicant to obtain a notification letter from the NDRC or the provincial branch after the filing is accepted. The relevant NDRC filing must be completed before either (a) the parties enter into a definitive agreement or (b) the signed definitive agreement takes effect, if the NDRC filing is stated as a closing condition.
  • MOFCOM Filing: Prior to making an outbound investment, a Chinese corporate investor should file an application with MOFCOM or its provincial counterparts if outbound investments do not fall within the scope of “sensitive countries and regions,” or “sensitive industries” [2]. It takes three business days for the applicant to obtain an Outbound Investment Certificate from the MOFCOM or the provincial counterparts after MOFCOM accepts the filing application.
  • Conversion from RMB into Foreign Currency: After the Chinese corporate investor obtains the Outbound Investment Certificate from the competent provincial branch of MOFCOM, he should register with a bank authorized by SAFE to exchange RMB into foreign currency and remit the foreign currency funds out of China for the outbound investment. Under certain other circumstances, Chinese corporate investors may be required to obtain SAFE’s approval before using foreign currency to invest outside China.

Hong Kong

[7] Professional Investor

  • Trust corporations, with total assets of not less than HK$40 million or its equivalent in foreign currency;
  • Individuals, either alone or with any associates on a joint account, having a portfolio of not less than HK$8 million or its equivalent in foreign currency;
  • Corporations or partnerships having either a portfolio of not less than HK$8 million or total assets of not less than HK$40 million; or
  • A corporate investment vehicle that is wholly owned by any of the three categories above.

Under recent amendments to the Hong Kong Code of Conduct’s Professional Investor regime, individual and certain corporate Professional Investors are subject to heightened requirements

Australia

[8] Sophisticated Investor

  • A person that has net assets of at least A$2.5 million; or
  • A person that has a gross income of A$250,000 for each of the last two financial years.
  • [9] Securities offerings are also exempt from disclosure if the minimum amount payable for the securities on acceptance is A$500,000.

[10] Professional Investor

  • A person has or controls gross assets of A$10 million.

Brazil

[11] Professional Investor

    • Certain types of institutions such as financial institutions, insurance companies, investment funds, etc.; or
    • Investors holding financial investments exceeding R$10 million and attest in writing their qualified investor condition.

Qualified Investor

  • Investors holding financial investments exceeding R$1 million and attesting in writing their qualified investor condition.


Mexico

[12] Basic qualified investor

    • Any person holding investments in securities during the prior year in average of approximately US$415,000, or that has obtained, during the two previous years, an annual net income equal to or exceeding approximately US$130,000.

Sophisticated qualified investor

  • Any person holding investments in securities during the prior year in average of approximately US$830,000, or that has obtained, during the two previous years, an annual net income equal to or exceeding approximately US$270,000.


India

Consult with local counsel.

Korea

[13] Professional Investor

  • Balance of financial investment instruments of at least KRW 500 million; or
  • Annual income of at least KRW 100 million.

Footnotes

[1] 17 C.F.R. 230.501.

[2] National Instrument 45-106, § 1.1, available at http://www.osc.gov.on.ca/documents/en/Securities-Category4/rule_20090918_45-106_3238-supplement.pdf.

[3] MiFID directive (2004/39/EC).

[4] Security and Futures Act § 4A(a), available at http://statutes.agc.gov.sg/aol/search/display/view.w3p;page=0;query=DocId%3A%2225de2ec3-ac8e-44bf-9c88-927bf7eca056%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr4A-he- .

[5] Legal Update: Amendment to the Definition of Classified Investors, available at http://www.arnon.co.il/files/e3b84790d602b8d3179de6a92b2be89a/Classified%20Investors_0.pdf.

[6] Email from Sherry Yin and Alexandra Gao, lawyers in the Beijing office of Morrison & Foerster LLP.

[7] The Securities and Futures (Professional Investor) Rules Chapter 571D, § 3, available at http://www.legislation.gov.hk/blis_pdf.nsf/6799165D2FEE3FA94825755E0033E532/7E7E9E6B95063DE1482575EF001D1A93/$FILE/CAP_571D_e_b5.pdf.

[8] Corporations Act 2001, § 708(8), available at http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s708.html; and Corporations Regulations 6D.2.03, available at http://www.austlii.edu.au/au/legis/cth/consol_reg/cr2001281/s6d.2.03.html.

[9] Id.

[10] Corporations Act 2001, § 708(11).

[11]Brazil: Different Categories of Investors Admitted in the Brazilian Securities Market, available at http://www.mondaq.com/brazil/x/362414/Fund+Management+REITs/Different+Categories+Of+Investors+Admitted+In+The+Brazilian+Securities+Market.

[12] Debt Capital Markets in Mexico: Regulatory Overview, available at http://us.practicallaw.com/8-523-9158.

[13] Financial Services Commission of Korea website, http://www.fsc.go.kr/info/ntc_news_view.jsp?bbsid=BBS0030&page=2&sch1=&sword=&r_url=&menu=7210100&no=31207.