Sophisticated Investors

A “sophisticated investor” is defined as a person who has net assets of at least $2.5 million or has a gross income of at least $250,000 per annum for the last two financial years. The assets or income must be certified by a qualified accountant within the last 6 months.

If an investor is investing more than $500,000 then they are automatically considered a sophisticated investor without needing the financial declarations.

Companies can seek unlimited investment from sophisticated investors, but if unsophisticated investors are in the mix, there are some legal requirements that are designed to protect them (see 20/12/2 rule).