{"id":631,"date":"2021-06-28T13:49:43","date_gmt":"2021-06-28T10:49:43","guid":{"rendered":"http:\/\/padilla.law\/?p=631"},"modified":"2021-06-28T13:50:25","modified_gmt":"2021-06-28T10:50:25","slug":"revised-definition-of-accredited-investor","status":"publish","type":"post","link":"https:\/\/padilla.law\/es\/articles\/revised-definition-of-accredited-investor\/","title":{"rendered":"Revised Definition of Accredited Investor"},"content":{"rendered":"<h2 class=\"wp-block-heading\">SEC Changes in Accredited Investor Definition<\/h2>\n\n\n\n<p>Last\nyear, the Securities and Exchange Commission (SEC) amended the definition of\n\u201caccredited investor\u201d to to expand the definition beyond specific income or net\nworth tests. &nbsp;This is important because\nthe sale of securities requires registration under the Securities Act of 1933\n(\u201cSecurities Act\u201d) or an exemption from registration, and most exeptions\nrequire that an investor meets the definition of \u201caccredited investor.\u201d &nbsp;This revised definition of an accredited\ninvestor will allow more individuals to become eligible for private investment\nopportunities (the exemptions to the rule) which is good news for start-ups and\ncompanies that look for investors. <\/p>\n\n\n\n<p>Before\nthese revisions, most of those who qualified as accredited investors did so by\nmeeting income or net worth requirements (also known as the \u201cwallet\ntest\u201d).&nbsp; In short, individuals would be considered\naccredited investors by meeting either of these requirements:<\/p>\n\n\n\n<ul><li>annual\nincome of $200,000 ($300,000 for joint income) or more in the 2 most recent\nconsecutive years, with the expectation of earning the same or more in the\ncurrent year; or<\/li><li>net\nworth exceeding $1 million, either individually or jointly with their spouse\n(excluding the value of the person\u2019s primary residence).<\/li><\/ul>\n\n\n\n<p>Now,\nthe definition is expanded to include those with knowledge and expertise in\nbusiness and financial matters. &nbsp;Summarized\nbelow are the key additions to the definition of accredited investors:<\/p>\n\n\n\n<ul><li>Knowledgeable\nemployees of certain private or mutual funds only for offerings by the private\nfund and other private funds that are managed by their employer<\/li><li>An\nindividual holding a Series 7, 65, or 82 license in good standing<\/li><li>An\nentity that is a private business development company or organization with\nassets exceeding $5 million or that consists of equity owners who are\naccredited investors<\/li><li>Family\noffices with at least $5 million in total assets under management and family\nclients<\/li><li>New\ndefinition of \u201cspousal equivalents\u201d (domestic partners, partners in civil\nunion) so that spousal equivalents may pool their assets to qualify<\/li><\/ul>\n\n\n\n<p>For\nmore detail, please check the SEC\u2019s website announcement of these changes <a href=\"https:\/\/www.sec.gov\/news\/press-release\/2020-191\">here<\/a>. <\/p>\n\n\n\n<p>This\narticle lays out certain recent revisions the SEC has indicated it will make to\nthe definition of \u201caccredited investor,\u201d but please note that this post (1) is\nnot provided in the course of and does not create or constitute an\nattorney-client relationship, (2) is not intended as solicitation, (3) is not\nintended to convey or constitute legal advice, and (4) is not a substitute for\nobtaining legal advice from qualified professionals.<\/p>\n\n\n\n<p><strong><em>Jos\u00e9\nPadilla is an attorney and the owner of <\/em><\/strong><a href=\"https:\/\/padilla.law\/es\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><em>Padilla Law? <\/em><\/strong><strong><em>PLLC<\/em><\/strong><\/a><strong><em>,&nbsp;where he represents\nstartups and investors. His practice focuses on formation, seed and VC\nfinancings, private equity, acquisitions, strategic corporate transactions, and\ngeneral advisory regarding corporate and financing strategy.&nbsp;<\/em><\/strong><\/p>","protected":false},"excerpt":{"rendered":"<p>SEC Changes in Accredited Investor Definition Last year, the Securities and Exchange Commission (SEC) amended the definition of \u201caccredited investor\u201d to to expand the definition beyond specific income or net worth tests. &nbsp;This is important because the sale of securities requires registration under the Securities Act of 1933 (\u201cSecurities Act\u201d) or an exemption from registration, [&hellip;]<\/p>","protected":false},"author":1,"featured_media":633,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Revised Definition of Accredited Investor - 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