Sophisticated Investor Test
http://www.cmcmarkets.com.au/en/sophisticated-investor-test
Certain offers will not have a disclosure documents when they are offered. In order to participate in such an offer you must satisfy one of the exemptions set out in section 708 of the Corporations Act. In order to meet the requirements of these exemptions you will need to provide us with additional information. The most common exemptions are those for sophisticated investors and professional investors.
Sophisticated Investor
Under section 708(8) of the Corporations Act an offer of securities does not need disclosure if:
- the minimum amount payable for the securities on acceptance of the offer by the person to whom the offer is made is at least $500,000; or
- the amount payable for the securities on acceptance by the person to whom the offer is made and the amounts previously paid by the person for the body's securities of the same class that are held by the person add up to at least $500,000; or
- it appears from a certificate given by a qualified accountant no more than 6 months before the offer is made that the person to whom the offer is made:
has net assets of at least the amount specified in regulations made for the purposes of this subparagraph; or
has a gross income for each of the last 2 financial years of at least the amount specified in regulations made for the purposes of this subparagraph a year; or
the offer is made to a company or trust controlled by a person who meets the requirements of subparagraph (c)(i) or (ii).
This is the so-called sophisticated investor rule. The most common method of satisfying the sophisticated investor rule is to provide an accountant’s certificate verifying that either:
- You have net assets of at least $2.5 million; or
- You have a gross income for each of the last two financial years of at least $250,000
A form of accountant’s certificate is available here and must be dated within the last 6 months.
Professional Investor
You can satisfy the professional investor requirement set out in section 708(11) of the Corporations Act if:
- You are a financial services licensee; or
- You have or control gross assets of at least $10 million.
If you are relying on this exemption you will need to provide us with proof that you satisfy either or both of these requirements.
For either the sophisticated investor or professional investor rules, if you have previously provided adequate information to us you may not need to provide it again if the information we hold is
current. For example, if the accountant’s certificate is dated no more than 6 months before the date of the offer.
More information about accountant’s certificates and the classes of exemptions is available on ASIC’s website.
Certificates issued by a qualified accountant
Generally people buying securities and other financial products must, under the Corporations Act 2001, be given a regulated disclosure document such as a prospectus or product disclosure statement. However, the Act has some exemptions from these requirements.
One of those exemptions is the offering of financial products to a person (either a natural person or a legal person) who is the subject of a current certificate from a qualified accountant certifying they have a prescribed net asset or gross income level.
A person holding such a certificate is a:
- ‘sophisticated investor’ for the purposes of Chapter 6D (if they are offered debt or shares) or
- ‘wholesale client’ for the purposes of Chapter 7 (if they are offered a financial product, other than insurance, superannuation or a retirement savings account product or service) and the financial product is not used in connection with a business.
This article discusses some of the requirements of issuing these certificates, and is current as at March 2006.
Qualified accountant
A qualified accountant is defined in s88B of the Corporations Act as a person meeting the criteria in a class declaration made by ASIC. Under our class order [CO 01/1256]
2001 class orders