You'll probably have heard (or will hear) the term wholesale investor quite a bit. Someone will say "this is for wholesale investors only".
Although there are actually 3 types of wholesale investors, most of the time, when people say wholesale, they actually mean sophisticated.
Sophisticated, professional or experienced are classifications used to describe investors that are more experienced and able to evaluate investment opportunities without needing a prospectus or other regulated disclosure documents.
The Corporation Act 2001(Cth) outlines the eligibility criteria for each category of investor. Detailed below are the requirements for each classification as required under section 708 of the Corporations Act 2001(Cth).
Have gross personal income over the last 2 years of at least $250k each year; or
Have net assets of over $2.5m
To show that you are a sophisticated investor you need a Qualified Accountant's Certificate.
Hold an Australian Financial Services License (AFSL); or
Have or control gross assets of at least $10m or more
To show that you are a professional investor you need an AFSL number or proof of assets.
An AFSL licensee is satisfied on reasonable grounds as described in Section 708(10) and s761GA of the Corporations Act 2001 (Cth.) that the person to whom the offer is made has previous experience in investing in securities that allows them to assess:
the merits of the offer
the value of the securities
the risks involved in accepting the offer
their own information needs
the adequacy of the information given by the person making the offer
*Please note, many companies & syndicates may decide to only offer new shares to investors who are classified as sophisticated or professional, but not offer them to investors who are classified as experienced.
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