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SOPHISTICATED INVESTOR AUSTRALIA

Lion Property Group offer a variety of wholesale investment products that are suitable for sophisticated investor Australia as well as wholesale investors from around the world.

What is a Sophisticated Investor?

The Corporations Act 2001 defines two types of investment offers: retail and wholesale. By law, everyone is considered a retail client by default. To be eligible for wholesale investment offers, you must be a ‘sophisticated investor.’

This distinction between retail and wholesale investments is to protect investors who are making financial and investment decisions. When engaging with retail investors, advisers and investment companies must fulfil additional compliance regulations. Retail investors are also protected by Future of Financial Advice (FOFA) reforms. Compliance with these regulations restricts the types of investments that can be offered to retail investors.

On the other hand, wholesale investors are considered experienced enough to be able to make their own investment decisions without the protections that are extended to retail investors. It is assumed that wholesale investors are able to apply an appropriate degree of discretion, scrutiny, and discrimination when evaluating an investment.

What are the Sophisticated Investor requirements in Australia?

According to Section 708(8)(c), to be classified as a sophisticated investor, an individual must obtain a certificate from a qualified accountant stating that the individual has received a gross annual income surpassing $250,000 for the last two financial years or has over $2,500,000 in net assets. The term ‘sophisticated investor’ also applies to a company or trust that is controlled by an individual fulfilling the requirements of Section 708(8)(c).

A qualified accountant is defined as members of the Chartered Accountants Australia and New Zealand or the Institute of Public Accountants. The certificate is valid for a period of two years, after which another certificate must be provided.

An individual can also be considered a sophisticated investor if they have a statement from an Australian Financial Services licensee acknowledging that that individual has suitable experience to assess the features of the offer. However, this does not apply to general insurance, RSA, or superannuation products.

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