To become an accredited investor, it is not necessary for you to pass any
particular examination or test. There is no requirement of an investor license
as well. But to qualify and become an accredited investor one must fulfill
specific requirements that are laid by the Securities and Exchange Commission
(SEC).
Not only this, an individual can even be asked to demonstrate to the
investment firm that he is in a position to invest in a particular product.
Specific necessities are needed to be fulfilled by the person either
individually or in a conjoint manner which includes the spouse to become an
accredited investor. The requirements include:
1. A person is having an individual income
exceeding $200,000 in the recent two calendar years or is having a joint
income with the spouse exceeding $300,000 in each of the two years and can
provide the validation that the same income level can be guaranteed in the
current year than the person can become an accredited investor.
Thus, the
person who is having an individual income of $150,000 can become an accredited
investor if he has a joint income with the spouse which exceeds $300,000. But
it should be noted that the person should meet the income requirements in all
the three years with the same method that is either individually or jointly.
For example:
if Mr. X who is a married man made $230,000 two years ago when his wife was
unemployed. And last year his income was $150,000 and his wife earned 210,000
making a total which is exceeding $300,000. This situation may seem like the
couple can meet the requirements of SEC, but they could not become an
accredited investor as they have not used the same method in all the three
years.
2. A person who is having an individual net
worth which exceeds $1,000,000 or even a joint quality that exceeds
$1,000,000 can become an accredited investor. But the primary residence
should not be included while estimating the net worth. And the liabilities
won't be deducted from the primary home unless they can be incurring within
the past 60 days.
3.One can even be an accredited investor if
one is an insider, meaning if you are a director, executive or the partner
of the issuer of the securities that you can be an accredited investor.
4. According to the SEC if you have trust
with total assets that exceed $5,000,000, then the individual is entitled
to become an accredited investor.
5. If a company fulfill the minimum
requirement of $5,000,000 and a charitable trust has assets that worth
more than $5,000,000, it is possible for them to portray the role of
accredited investors.
Accept
Reject
