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.

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