Do you qualify as a wholesale investor?

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Written by RC Global Funds Managenment Updated over a week ago

In Australia, there is range of investment products that are only available to wholesale investors. A wholesale investor is generally a more experienced investor in financial products and does not need the regulatory protections that are provided for retails investors. Wholesale investors have a good understanding of the risks involved and the specific characteristics of the fund or financial security they are investing in.

Under the Corporations Act 2001, a person can be considered a wholesale investor if they pass one of the following tests:

Sophisticated Investor Test

There are two measures where you can qualify as a wholesale investor under the sophisticated investor test, and these are:

  1. If you or entity that makes an investment of at least $500 000 or more in an investment fund.
  2. If you or entity investing less than $500,000 in an investment fund or an entity have a certificate from a qualified accountant stating the following:
    • Have a gross income for each of the last two financial years of at least $250,000 or
    • Have or control gross assets of at least $10 million or more.

Professional Investor Test

To qualify as a wholesale investor under the professional test, you or entity must:

  • Have and Australian Financial License (ASFL), or
  • Have net assets of at least $2.5 million

For verification, you have to provide the ASFL Certificate or proof of assets form.

Experienced Investor Test

To qualify as a wholesale investor through the experienced investor test the AFSL licensee that is making the offer is satisfied on reasonable grounds as described on Section 708(10) and s761GA of the Corporations Act 2001 (Cth.) 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

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