Individual Accredited Investor Certification, In Light of Dodd-Frank

If you are looking for a short, individual accredited investor certification that takes into account the Dodd-Frank changes and SEC guidance issued as a result of Dodd-Frank, please see my example below.

The Dodd-Frank bill does not change the requirement that the issuer has to reasonably believe that an investor is accredited.  As to what constitutes a reasonable belief, see SEC Release 33-6455, March 3, 1983:

“What constitutes ‘reasonable belief’ will depend on the facts of each particular case. For this reason, the staff generally will not be in a position to express views or otherwise endorse any one method for ascertaining whether an investor is accredited.”

This short form certification is designed for use with other documents. Depending on the size of the offering, how well the principals of the issuer know the individual investors, and the number and type of investors, this short form certification may or may not be sufficient. Issuers should always utilize counsel when engaging in a securities offering.

This short form certification is not appropriate for use in connection with a round in which the issuer generally solicits or generally advertises its offering.

INDIVIDUAL ACCREDITED INVESTOR CERTIFICATION

I hereby certify that I am familiar with the definition of the term “accredited investor” as defined in Rule 501 of Regulation D issued pursuant to the Securities Act of 1933, as amended, and that I meet the criteria to qualify as an accredited investor, in the category or categories indicated by my initials below.

  1. [        ] I am a director, executive officer, or general partner of the issuer of the securities being offered or sold, or a director, executive officer, or general partner of a general partner of that issuer.
  2. [        ] I am a natural person whose individual net worth, or joint net worth with that of my spouse, is at least $1,000,000, excluding the value of my primary residence, but including indebtedness secured by such residence in excess of the value of such residence, and calculated in accordance with the below-described rules.
  3. [        ] I am a natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with my spouse in excess of $300,000 in each of those years and I have a reasonable expectation of reaching the same income level in the current year.
Rules regarding primary residences: In calculating my net worth, I have (i) excluded my primary residence as an asset, (ii) excluded debt secured by such residence, up to the estimated fair market value of the residence; (iii) included the amount of any increase on the debt secured by the primary residence incurred within 60 days prior to the purchase of the securities (unless related to the acquisition of the primary residence); and (iv) included debt in excess of the fair market value of the primary residence.

Dated:                                                 

                                                           

Signature

                                                           

Print name

Address:                                              

                                                           

                                                            

About Joe Wallin

Joe Wallin focuses on emerging, high growth, and startup companies. Joe frequently represents companies in angel and venture financings, mergers and acquisitions, and other significant business transactions. Joe also represents investors in U.S. businesses, and provides general counsel services for companies from startup to post-public.
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