Who is an Accredited Investor? (In Canada)

August 15, 2020
By admin

Whether you are an Accredited or a Non-Accredited Invest, the options available to you differ. 

Many Canadians have accumulated their wealth and achieved financial independence by accessing private equity investments. Private Equity or private real estate investments are not only a common source of superior returns for the wealthy, but in many cases have low correlation to traditional investments thus providing a means of diversification for investors with traditional investment portfolios. Investment in these categories is also regulated by Provincial Securities Commissions for investor protection. 

Individual investors can fall into the two most common categories primarily; 

  1. Accredited, and 
  2. Non-Accredited  

AN ACCREDITED INVESTOR is simply an individual, legal entity like a company or trust, or financial institution, that meets financial qualifications enabling participation in certain opportunities that are not available to non-accredited investors. 

In Canada, the details of the official definition of an accredited investor and who qualifies as one can be found in section 1.1 of the National Instrument 45-106. There are over 20 situations in which a person or entity is considered an accredited investor, but the most frequently used cases include:

  • An individual, alone or with a spouse, who has net financial assets of more than $1 million (this only includes financial assets and does not include equity in personal real estate such as a primary residence)
  • An individual who has a before tax income of over $200,000 for at least two years in a row ($300,000 if combining income with a spouse) and expects to exceed that income the current calendar year
  • A person registered in Canada, under securities legislation, as a dealer or an adviser (this would be an investment professional)

For Accredited Investors, an issuer must only provide a Term Sheet for a subscription. 

NON-ACCREDITED INVESTORS, are those who don’t meet the accredited investor thresholds and therefore need an issuer provided Offering Memorandum in order to invest. 

Evest Funds may provide an Offering Memorandum, for Non-Accredited Investors to participate depending on the project, for which you would need to discuss with your Dealing Representative.