Reversal of changes to High Net Worth Individual and Self-certified Sophisticated Investor criteria implemented

Nick Williams

Nick Williams


As discussed in our recent update, the government announced in the Budget that the eligibility criteria for the exemptions, which allow shares and other financial instruments to be marketed to High Net Worth Individuals and Self-certified Sophisticated Investors without the regulatory protections provided by the financial promotion regime, would revert to those that applied pre-31 January 2024. In an explanatory memorandum, the government explains that significant concerns have been raised by stakeholders about potential unintended impacts of the changes to the exemptions which came into effect on 31 January2024. Specifically, the technology, angel investing, and theatre sectors raised new concerns that the changes to the eligibility criteria for the exemptions could affect the ability of start-up businesses to obtain investment, and the ability to finance theatre productions through small-scale investors.
For High Net Worth Individuals, the financial thresholds to be eligible for the individual exemption will revert back to: an income of at least £100,000 in the previous financial year, or having certain net assets of at least £250,000 throughout the previous financial year.
For Self-certified Sophisticated Investors: the exemption will include the criterion of having made two or more investments in an unlisted company in the previous two years and the annual company turnover required to satisfy the "company director" criterion reverts back to £1 million.
The revised statements that eligible investors will have to complete are schedule to the implementing order.
The latest changes come into force on 27 March 2024, and any statements made in accordance with the criteria in effect from 31 January 2024 up to that date will remain valid up to and including 30 January 2025.
Investors and financial advisers will accordingly need to prepare for another change to the statements they use.
If you require legal advice or assistance in relation to the issues described, please get in touch with your usual contact at DMH Stallard LLP or contact Nick Williams by email or call on 0207 8221523.

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