Since April of 2016, the Dutch Financial Authorities (AFM) has increased the investment limit for investing through crowdfunding platforms from €40.000 to €80.000. Important to mention is that this is per person per crowdfunding platform. If you have a shared bank account with your partner, you can link this to your account. In this way, it is possible to invest €160.000 in total on the platform. When you are a qualified investor, you do not have an investment limit; you can invest an unlimited amount of money.
What is a qualified investor?
A qualified investor, also commonly referred to as an accredited investor, is an individual or other entity legally permitted by the financial authorities in their country to invest in hedge funds, venture capital funds, private equity offerings, and other private placements. Qualified investors need to prove a sufficient income or net worth before they are allowed to purchase unregistered securities.
Sometimes the term High-Net-Worth Individual (HNWI) is used to designate persons whose investible wealth exceeds a given amount. These individuals are defined as holding financial assets with a value greater than US$ 1 million.
How do you become a qualified investor in different countries?
To become a ‘qualified investor,’ there are a few criteria that need to be considered. Besides, the term ‘Qualified Investor’ is not used everywhere around the world.
In most of the European countries, it is called a ‘Qualified investor.’ In the United Kingdom, it is called an ‘Investment Professional.’ The lender has carried out transactions in significant size in the relevant market at an average frequency of 10 per quarter over the previous year. The investor’s financial instrument portfolio, including cash deposits and financial instruments, exceeds €500.000. It is also an option to become a qualified investor if the investor has worked in the financial sector for at least one year in a professional position.
In the US, it is called an ‘Accredited Investor.’ To become an ‘Accredited investor’ for the Max Crowdfund platform, the US resident needs to have the documents found on the website signed and authenticated by a third party. This could be an accountant, bank, lawyer, professional, investment institution, or regulated firm such as a US broker-dealer. The investor should have an individual annual income of more than $200.000 or a joint annual income with their partner of $300.000. A net worth of more than $1.000.000 is also sufficient to become an accredited investor.
In Australia, the lender has different names; a ‘Sophisticated Investor’ or a ‘Professional Investor.’ The investor needs to be a wholesale client, not a ‘retail client.’ A ‘Retail Client’ is considered by the law as less financially literate than the wholesale clients. A lender is owning net assets of $2.5 million or has an annual income of over $250,000 shown over two financial years, as certified by an accountant.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This information is designed to help investors make an informed decision. For a ‘Wholesale Investor,’ the usual rules do not apply to offers of financial products made. As a result, the lender may not receive a complete and balanced set of information. The investor will also have fewer other legal protections for these investments. The lender has an investment business, or a large business, or a government agency.
An ‘Investment Professional’ in South Korea is allowed to make overseas securities exchanges. The lender can invest in real estate opportunities all around the world without an investment limit. The investor also has opportunities to make investments in high-risk products. Besides, the professional should have at least two years of experience managing financial investment instruments.
For more information, please visit Max Crowdfund.
Written by: Julia van der Kooij