Australia: Investor types and criteria
 
How do I invest over AUD $10,000?
 
 

 

What is a Retail Investor?

Everyone is considered a retail investor unless they can prove they are a wholesale investor.

Retail investors are restricted from investing in risky investment opportunities (derivatives, start-up investing etc) without appropriate disclosures and protections in place. Wholesale investors can invest in more risky investments without as many restrictions.

For equity crowdfunding, retail investors can invest in companies but are provided with the following protections:

  • retail clients complete a risk acknowledgement before applying for shares under a CSF offer;
  • retail clients do not invest more than the investor cap ($10,000) per company in any 12-month period; and
  • retail clients are informed of and able to exercise their cooling-off rights to withdraw from a CSF offer within five days of applying.

Investors looking to invest more than $10,000 in a crowdfunding offer will need to verify themselves as a wholesale investor. See below for details.

 

What is a Wholesale Investor?

Sophisticated, professional or experienced are classifications used to describe wholesale investors. The Corporations Act 2001 outlines the criteria for each of these classifications. See below for a summary for each:

 

Sophisticated Investor

A Sophisticated Investor is defined in Section 708 (8) and 761G of the Corporations Act as having:

  • net assets of $2.5 million; and/or
  • gross income for the last 2 financial years of at least $250,000

A Sophisticated Investor must provide a certificate given by a qualified accountant that verifies these amounts. A template of the certificate to provide your accountant can be found here (You will need to log into your Swarmer account to submit this form).

 

Professional Investor

A professional investor is defined in Section 708 (11) and 761G of the Corporations Act as having:

  • an Australian Financial Services License (AFSL); or
  • have or control gross assets of at least $10m or more

To show that you are a professional investor you need an AFSL number or proof of assets.

Please contact Swarmer to register as a professional investor - here

 

Experienced Investor

An experienced investor is defined in Section 708 (10) and 761GA of the Corporations Act that the person to whom the crowdfunding offer is made has previous experience in investing in securities that allows them to assess:

  • the merits of the offer; and
  • the value of the securities; and
  • the risks involved in accepting the offer; and
  • their own information needs; and
  • the adequacy of the information given by the person making the offer;

Please contact Swarmer to register as an experienced investor - here

 

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