If you're a small business owner, you might want to sell shares on the open market to raise money. However, that doesn't mean you want to sell a part of your company to anyone.
You will want to find accredited investors to ensure you control how the company continues to grow. This is why the Accredited Investor Checklist is such an essential document.
The term "accredited investor" is defined by the SEC's Rule 501 of Regulation D if an investor meets a specific set of criteria. To be accredited, an investor will have to have at least $200,000 in annual income, or $300,000 if the income is reported jointly. That's in addition to having a net worth of at least $1 million excluding the primary residence.
By nature, the investor would have to be willing to take risks to purchase unregistered shares.
Depending on your state, an Accredited Investor Checklist may also be known as:
Investor Accreditation Checklist
Verified Investor Checklist
Accredited Investor Form
Accredited Investor Questionnaire
Checklist for Accredited Investors
Investor Classification Declaration Form
If you own a company and are looking to sell shares, this SEC designed checklist is a tool for doing this. The rules governing unregistered shares are strict, and only accredited investors can partake in the purchase. If you don't use the Accredited Investor Checklist, you risk selling your company to people or entities that can jeopardize its future.
Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Accredited Investor Checklist.
Laws vary by location. Each document on 360 Legal Forms is customized for your state.
All you have to do is fill out a simple questionnaire, print, and sign. No printer? No worries. You and other parties can even sign online.
The Accredited Investor Checklist might not be the most complex of documents, but you wouldn't want to make a mistake and sell parts of your company to the wrong investors or, worse, get scammed.
Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.
To create your document, please provide:
Checklist creator: Identify the investor or investee creating the checklist.
Corporation details: The legal name of the company and the state of incorporation.
Effective date: When the checklist is made.
Investor information: The full name of the proposed investor, including the net worth, income, position, and category.
Signature: The investor is required to sign the checklist.
SEC: The Securities and Exchange Commission of the United States is officially tasked to protect investors by ensuring the transparency of investment-grade securities and the companies that issue them.
Accreditation: The process of formally verifying someone or something to have a particular status.
Share: A single unit of equity ownership in a corporation.
Shareholder/Stockholder: A person or legal entity owning shares in a company.
Board of Directors: A group of people appointed by the shareholders to act on their behalf in the corporation's management and oversight.
Corporate bylaws: A set of internal rules helping company directors manage the company.
The Accredited Investor Checklist doesn't require notarization. However, you can choose to use a notary public to prevent potential issues later on, such as the signature getting challenged in court.
After the potential investor signs the Accredited Investor Checklist, they should share it with the company's management from whom they want to buy shares. However, there isn't a formal agency or institution to officially approve the accreditation. Since 2013, the SEC urges anyone looking to sell to accredited investors to perform their due diligence in verifying investor status.
Another term for unregistered shares is restricted shares, a type of securities not registered with the SEC or available for trade on the exchanges. They don't have a registration statement on file with the SEC. The most prominent feature of unregistered shares is that they have fewer investor protections and are generally considered high-risk. That is why these shares are only offered to accredited investors.
A registered share is a type of share issued in the name of a shareholder. The information of the shareholder is kept on the company’s record. And if the shareholder chooses to transfer the registered share to another shareholder, they will need to re-register it.
Rule 144 of the SEC exists to set conditions on how unregistered shares can be sold and resold. The rule specifies conditions that have to do with public information pertaining to the investor and how the seller can propose the sale.
It refers to the statement on the stock certificate. This is a statement of all the restrictions pertaining to the transfer of shares. The SEC puts the legend on the stock certificate of unregistered shares. However, some states may not require the legend statement.
Purchasing unregistered shared can be tricky and investors can find themselves in a security scam. Tasked to protect investors, the SEC has specific recommendations for investors of these shares. Anything that promises high returns without an equivalent increase in risk, for example, is usually a red flag. Aggressive sales tactics are not a good sign either. And if you run into problems with the sales documentation, that’s usually the sign of a scam.
Our exhaustive library of documents covers your personal, business, and real estate needs with all of your DIY legal forms.
Create professional documents for thousands of purposes.
Make unlimited documents and revisions. Sign online in seconds.
Our documents are vetted by lawyers and are applicable to all 50 states.