High Net Worth or Sophisticated Investors

These are Investors that are deemed to be able to look after themselves in terms of understanding investment opportunities.

Before 2005 Investors would have to register with the FSA and have proven that they are suitable to receive investment offers. Not necessarily suitable in that they were reputable, but that they had experience in evaluating investments, or could afford a potential loss.

Since then Investors are able to self-certify that they are both knowledgeable and that they understand the risks involved.

In doing so you are actually giving away some protection, since there will be no redress from the FSA and you will have positioned yourself as knowing what you are doing in any court case.

So why would you self-certify? Well, many business angel networks and people with opportunities, are only allowed to approach or discuss investment with Investors who have self-certified. Often that is a condition that must be meet before any information on investment opportunities are given.

The following define what is meant by a High Net Worth or Sophisticated Investor

Sophisticated Investor

At least one of the following should apply:

  • a member of a network or syndicate of business angels and have been so for at least the last six months before the date you self-certify;
  • you have made more than one investment in an unlisted company in the two years before the date you self-certify;
  • you are working, or have worked in the two years before the date you self-certify, in a professional capacity in the private equity sector, or in providing finance for small and medium enterprises;
  • you are currently, or have been in the two years before the date you self-certify, a director of a company with an annual turnover of at least £1 million.

And what about a High Net Worth Individual?

You should only self certify as a high-net worth individual if at least one of the following applies:

  • you had, during the financial year immediately preceding the date you self-certify, an annual income to the value of £100,000 or more;
  • you held, throughout the financial year immediately preceding the date you self-certify, net assets to the value of £250,000 or more (excluding certain types of assets).

You will also have to acknowledge that you have given up certain rights.

Normally the self-certification forms have a section where you say you understand that you can receive financial promotions that may not have been approved by the FSA and that you know you can lose property / money from such investments.

Examples of Self-Certification forms

Sophisticated Investor Form Example

High Net Worth Investor Form Example

 

High Net Worth Investor