Accredited Investors in Michigan

In Michigan, the definition of an accredited investor largely mirrors the federal definition provided by the U.S. Securities and Exchange Commission (SEC). Michigan follows federal guidelines for who qualifies as an accredited investor — especially in relation to securities offerings that are exempt from registration under state Blue Sky Laws, such as private placements or certain crowdfunding opportunities. Like other states, Michigan may have its own rules or exemptions in securities offerings that involve in-state issuers and in-state investors. However, the qualification standards for accredited investors are generally consistent with federal regulations.

What is an Accredited Investor?

An accredited investor is an individual or business who can buy and sell securities that are not registered with a financial authority, such as pre-IPO shares. These investors have access to investments that are not publicly available, including startups, hedge funds, and private placements. Such investments are often risky and come with high fees. Importantly, there are certain qualifications that must be met in order to be considered an accredited investor.

What are the Qualifications to be an Accredited Investor?

Accredited investors are financially sophisticated, require less regulatory protection, and are able to understand the risks that can come with investing. However, there are certain criteria that must be met in order to qualify as an accredited investor. While there is no specific process to become an accredited investor, pursuant to SEC guidelines, the following are the key criteria for Michigan accredited investors:

• Income — In order to qualify as an accredited investor, an Individual must have had an annual income of $200,000 or more (or $300,000 with a spouse) in each of the past two years. There is an expectation in cases where the income is the same or higher in the current year.
• Net worth — Individuals (or couples) with a net worth exceeding $1 million, excluding the value of their primary residence may meet the qualifications for an accredited investor.
• Investment professionals — Certain professionals with specific securities licenses (e.g., Series 7, 65, or 82) may be considered accredited investors.

Directors, executive officers, or general partners of the company issuing securities may qualify as accredited investors. In addition to individuals, entities can qualify as accredited investors, including institutional investors such as banks, insurance companies, investment firms, or large companies. Other entities, such as trusts or partnerships with assets exceeding $5 million may also qualify.

Exemptions for Michigan Accredited Investors

Michigan may offer state-specific exemptions for intrastate offerings under Rule 147 or Rule 147A. There may also be exemptions that apply in certain instances of crowdfunding, where the requirements for accredited investors could slightly differ from federal rules, depending on the offering structure.

Contact an Experienced Business Attorney

If you are an accredited investor or are seeking accredited investors to help your business grow, it’s essential to have the counsel of a knowledgeable business attorney. With offices in East Lansing, Mt. Pleasant, Grand Rapids, and Detroit, The Gallagher Law Firm offers a wide range of professional services to business owners, investors, and entrepreneurs. To learn more about how we can assist you, contact us online, call (517) 853-1515 or email bpg@thegallagherlawfirm.com.