High-net-worth and sophisticated investor criteria – what’s all the fuss about?
Background
On 31 January 2024, a number of changes were introduced at relatively short notice changing the qualifying criteria for the high-net-worth individuals (“HNWI”) and self-certified sophisticated investors (“SCSI”) exemptions.
The changes led to much criticism from the UK Business Angels Association, early-stage businesses and angel investors around the adverse and detrimental impact that such changes could have on the early-stage ecosystem, severely restricting the ability of early-stage businesses to raise funds from bona fide HNWIs and SCSIs.
HM Treasury has reversed the changes made in January with effect from 27 March 2024.
What are the criteria for HNWI and SCSI
Following the reversal of the January changes, the qualifying criteria for HNWI and SCSI are now (as previously):
| HNWI Qualifying Criteria To qualify as a HNWI, the investor must have had: | SCSI Qualifying Criteria To qualify as an SCSI, the individual must: |
|---|---|
| a. an income of at least £100,000 in the last financial year; or b. net assets of at least £250,000 throughout the last financial year. | a. have made at least two investments into an unlisted company in the last two years; b. have been a director of a company with an annual turnover of at least £1,000,000 within the last two years; c. have declared that they are, and have been, a member of a network or syndicate of business angels for a minimum of six months prior to the date of the declaration; and d. have declared that they are working or have worked (in the two years immediately prior) in a professional capacity in the private equity sector or in the provision of finance for small and medium sized enterprises. |
If you have any questions in relation to the contents of this article please contact, Lauren Lashley at [email protected]
