Once an individual has financial independence through sufficient income, real estate, mutual funds, publicly- traded stocks, bonds, T-bills, sale of a business or other financial investments, they are called “Accredited Investors” and are eligible to make direct investments into Private Companies outside of the normal Public Stock Market (such as Private Equity and other financial instruments open to High Net Worth Individuals making significant investments).
The Ontario Securities Commission defines an “accredited investor”, according to its Rule 45-802 as:
- An individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
- An individual whose net income, before taxes, exceeded $200,000 in each of the two most recent calendar years, or whose net income, before taxes, combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years, and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
- An individual who, either alone or with a spouse, has net assets of at least $5,000,000; and
- A person, other than an individual or investment fund, who has net assets of at least $5,000,000, as shown on their most recently prepared financial statements.