1) Retail Investor

Anyone over the age of 18 with either Canadian citizenship or Permanent Resident Status could be categorized as a Retail Investor. In the finance world, the word retail is added to investor to refer to the general public. Any client who is legally able to invest but does not qualify as an accredited investor, permitted client, or an eligible investor is a retail investor.

Retail Investors have a maximum investment limit of $10,000 per company for Equity crowdfunding investments and a maximum investment limit of $10,000 per company, $10,000 per year for Offering Memorandum Investments. Note: Not all Offering Memorandum offerings allow Retail Investors (Non-eligible Investors) to invest.

Retail Investors with Investment or Finance knowledge could qualify as Self Certified Investors. Read more below.

2) Eligible Investor

An eligible investor includes but is not limited to either:
1. A person whose net financial assets, alone or with a spouse, in the case of an individual, exceed $400,000.
2. A person whose net income alone before taxes exceeded in each of the 2 most recent calendar years and in the current year as well $75,000.
3. A person who with a spouse, whose net income, exceeded in each of the 2 most recent calendar years and in the current year as well $125,000.
4. A partnership of which all partners are eligible investors, or accredited investors.

Eligible Investors have a maximum investment limit of $10,000 per company for Equity Crowdfunding Investments. Eligible Investors may have higher limits depending on suitability for Offering Memorandum Investments, but are still limited to a yearly investment maximum of $100,000.

Eligible Investors with Investment or Finance knowledge could qualify as Self Certified Investors. Read more below.

3) Accredited Investor (AI)

This type of investor includes large financial institutions, government agencies, angel groups, charities, family trusts as well as certain individuals.  High net worth individuals make up the majority of Accredited investors.  We have further defined Accredited Investor below as either an individual AI or a non-individual AI.

Accredited Investors do not have maximum investment limits.

Am I responsible for identifying as an AI?

Yes, but don’t worry, Equivesto verifies whether an investor is accredited or not. As part of the sign up process, we ask individuals identifying as Accredited Investors to provide documents to support their status as an Accredited Investor. We keep all verification records which you can access for your reference.

4) Permitted Client

A permitted client is usually corporations who are regulated by either a federal/provincial/municipal government, a federal act, an SRA or another regulatory entity. Other legal entities that can be a permitted client are investment funds or angel or VC groups comprised of permitted clients. An individual can be a permitted client if they have a minimum of CAD $25,000,000 in net assets (excluding liabilities).

Permitted Clients do not have maximum investment limits.

5) Self-Certified Investor

Self-Certified Investors are individuals who do not qualify as Accredited Investors or Permitted Clients, but have adequate finance or investment knowledge to invest in private investments at higher limits, and as part of ‘Accredited Investor Only’ deals. On Equivesto, Individuals sign up as Retail or Eligible Investors, and can add ‘Self-Certified Investor’ status to their account.

The category of Self-Certified Investor is not recognized in all jurisdictions of Canada, and only investors living in Ontario, Alberta, or Saskatchewan can become Self-Certified Investors at this time. The Self Certified Investor category can also only be used for investments located in those same 3 jurisdictions. For investments outside those jurisdictions, standard Retail Investor or Eligible Investor limits will apply.

Self-Certified Investors have a maximum investment limit of $30,000 per year when participating in Investment as a Self-Certified Investor.

How do I qualify as a Self-Certified Investor?

• Hold a CFA or Chartered Financial Analyst Charter from the CFA Institute or any predecessor or successor organization;

• Hold the CIM or Chartered Investment Manager designation from the Canadian Securities Institute, a Division of Moody’s Analytic Global Education (Canada) Inc. or any predecessor or successor organization;

• Hold the CBV or Chartered Business Valuator designation from the CBV Institute or any predecessor or successor organization;

• Hold a CPA or Chartered Professional Accountant designation from CPA Canada;

• Hold a CIWM or Certified International Wealth Manager Designation from the Canadian Securities Institute, a Division of Moody’s Analytic Global Education (Canada) Inc. or any predecessor or successor organization;

• Was admitted to practice law in a jurisdiction of Canada and at least 1/3 of the individuals practice has involved providing advice in respect of financings involving private or public distributions of securities or mergers and acquisition transactions;

• Holds a Master of Business Administration degree, focused on finance, from a university in Canada or from an accredited university in a foreign jurisdiction;

• Holds an undergraduate degree in Finance or holds an undergraduate degree in Business or Commerce with a major or specialization in finance or investment, from a university in Canada or from an accredited university in a foreign Jurisdiction;

• Has passed the Canadian Securities Course Exam administered by the Canadian Securities Institute, a Division of Moody’s Analytic Global Education (Canada) Inc. or any predecessor or successor organization;

• Has passed the Exempt Market Products Exam administered by the IFSE Institute, Canada, or any predecessor or successor organization;

• Has passed the Canadian Investment Funds Course Exam administered by the IFSE Institute, Canada, or any predecessor or successor organization;

• Has passed the Canadian Investment Funds Course Exam administered by the Canadian Securities Institute, a Division of Moody’s Analytic Global Education (Canada) Inc. or any predecessor or successor organization;

• Has passed both the Series 7 Exam administered by the Financial Industry Regulatory Authority in the United States of America, or any predecessor or successor organization, and the New Entrants Course Exam administered by the Canadian Securities Institute, a Division of Moody’s Analytic Global Education (Canada) Inc. or any predecessor or successor organization;

• Holds the CFP or Certified Financial Planner designation from FP Canada or any predecessor or successor organization;

• Holds a Financial Planner or Financial Advisor credential, in good standing, from a credentialling body approved by the Financial Services Regulatory Authority of Ontario under the Financial Professionals Title Protection Act, 2019 that permits the individual to use the Financial Planner or Financial Advisor title;

• Has management, policy-making, engineering, product, or other relevant operational experience at a business that operates in the same industry or sector as the issuer and who, as a result of this experience, is able to adequately assess and understand the risk of investment in the issuer.

What Documents Can I Provide to Qualify as an Eligible Investor, Accredited Investor, or Permitted Client?

Investors can qualify as Eligible Investors or Accredited Investors based on either Annual Personal Income or Net Financial Assets. Individuals can only quality as Permitted Clients based on overall Net Worth.

Individuals investing via a company must still qualify based on their personal financial details. Companies only qualify based on the financial position of their owners.

Income Qualification Documents:

• CRA Notice of Assessment from the Previous year;

• T4 document prepared by your employer;

Net Financial Asset Qualification Documents (NOTE: Net Financial Assets do NOT include real estate):

• Investment Account Statements (or screenshots);

• Bank Account Statements (or screenshots);

• Signed letter from your Accountant (not yourself) attesting to the amount of your net financial assets;

• Articles of Incorporation for companies you own and their recent balance sheet, income statement, or valuation;

• Signed investment documents for other private investments like loans, share purchases, etc.;

Net Worth Qualification Documents:

• All Net Financial Asset documents listed above;

• Purchase and sale agreements for properties you own;

What are Net Financial Assets?

Net Financial Assets are types of assets used for monetary or investment purposes. Personally held Real Estate is NOT included. Below is a non exhaustive list of examples:

• Cash

• Checking Accounts

• Savings Accounts

• Investment Accounts

• Tax Free Savings Account (TFSA) funds

• Registered Retirement Savings Plan (RRSP) funds

• Shares you own directly

• Companies you own

• Pensions

• LIRA

Check out our free Net Worth and Net Financial Asset Calculators here: https://equivesto.com/freecalculators