Are You Eligible to Invest in Private Equity and EIS?

The Financial Services and Markets Act (FSMA)​

The government strictly outlines the criteria for eligibility to invest in alternative investment vehicles which are officially recognised. Participation in these types of investments is strictly restricted to individuals with sufficient wealth or expertise.

To be eligible to receive offer documents and investment details a simple but important declaration must be made by the investor which states that they fall into one or other of these categories.

This is a simple self-certification which is achieved by completing a simple online form. These forms are worded in law and must be replicated exactly. The declarations include short but clear risk warnings which an investor must read through before then reading the exact criteria for eligibility and completing and signing, declaring their risk awareness and that they meet the criteria.​​​

Summary: High Net Worth Individual (HNWI)

In summary a High Net Worth Individual either earns £100,000 per year or has £250,000 in assets, not including their home.

Summary: Sophisticated Investor (SI)

In summary a Sophisticated Investor is a Business Angel, or has made illiquid investments before, or is a director of a company with a turnover of £M, or works in corporate finance.

Exact Legal Criteria In The FSMA Declarations

HNWI

I am a certified high net worth individual because at least one of the following applies-

a) I had, during the financial year immediately preceding the date below, an annual income to the value of £100,000 or more;

b) I held, throughout the financial year immediately preceding the date below, net assets to the value of £250,000 or more. Net assets for these purposes do not include-

i) the property which is my primary residence or any loan secured on that residence;

ii) any rights of mine under a qualifying contract of insurance within the meaning of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; or

iii) any benefits (in the form of pensions or otherwise) which are payable on the termination my service or on my death or retirement and to which I am (or my dependants are), or may be, entitled.

SI

I am a self-certified sophisticated investor because at least one of the following applies-

(a) I am a member of a network or syndicate of business angels and have been so for at least the last six months prior to the date below;

(b) I have made more than one investment in an unlisted company in the two years prior to the date below;

(c) I am working, or have worked in the two years prior to the date below, in a professional capacity in the private equity sector, or in the provision of finance for small and medium enterprises;

(d) I am currently, or have been in the two years prior to the date below, a director of a company with an annual turnover of at least £l million.