What is an Accredited Investor?
FIRST THINGS FIRST, WHY ACCREDITED INVESTING?
Accredited investing opens up a whole shiny new world of investing made available to you. These include private equity, venture capital, angel investing, and hedge funding.
WHAT IS AN ACCREDITED INVESTOR?
The accredited investor is someone who has a special status so that they can have investments that are typically more high-risk. While this definition varies from country to country, it also varies from province to province. While there’s no formal process in Ontario, legislation requires that you meet specific criteria to participate in certain investments. This simply means you’ll need to be prepared to provide documentation proving you meet the criteria.
According to the Ontario Securities Commission (OSC), an accredited investor means you have a:
- Net income before taxes of more than $200,000 in each of the two most recent calendar years and expected net income of more than $200,000 in the current calendar year.
- Net income before taxes combined with a spouse of more than $300,000 in each of the two most recent calendar years and expected combined net income of more than $300,000 in the current calendar year.
- Financial assets, alone or with a spouse, of at least $1 million before taxes but net of related liabilities
- Financial assets include cash and bank deposits but not the value of a house.
- Net assets, alone or with a spouse of at least $5 million. Net assets generally include all of your assets after subtracting your debt.
Contact the OSC’s Inquiries & Contact Centre to learn more about these rules.