South Carolina Accredited Investor Qualification and Verification Requirements for Reg D, Rule 506(c) Offerings

• Category: Small Business - Investment or Funding
• State: Multi-State
• Control #: US-ENTREP-0047-1
• Format: Word; Rich Text

Description

"Under SEC law, a company that offers its own securities must register these investments with the SEC before it can sell them unless it meets an exception. One of those exceptions is selling unregistered investments to accredited investors. To become an accredited investor the (SEC) requires certain wealth, income or knowledge requirements. The investor must fall into one of three categories. Firms selling unregistered securities must put investors through their own screening process to determine if investors can be considered an accredited investor. The Verifying Individual or Entity should take reasonable steps to verify and determined that an Investor is an "accredited investor" as such term is defined in Rule 501 of the Securities Act, and hereby provides written confirmation. This letter serves to help the Entity determine status, take Investor statements regarding information, and waiver of claims." South Carolina Accredited Investor Qualification and Verification Requirements for Reg D, Rule 506© Offerings In South Carolina, accredited investor qualification and verification requirements for Reg D, Rule 506(c) offerings are established to ensure compliance with securities regulations. These requirements aim to protect both investors and issuers participating in private offerings, specifically those that allow for general solicitation and advertising. To qualify as an accredited investor in South Carolina, individuals and entities must meet certain criteria based on their income, net worth, and professional experience. The specific requirements are outlined below: 1. Income-Based Qualification: — Individuals must have an annual income of at least $200,000 for the past two years, or $300,000 jointly with a spouse. — Entities, such as corporations, partnerships, or LCS, can qualify if they have total assets exceeding $5 million. 2. Net Worth-Based Qualification: — Individuals must have a net worth exceeding $1 million, either individually or jointly with a spouse. Primary residence value is excluded from the calculation. — Entities can qualify if they are comprised of equity owners each meeting the individual net worth requirement. It is essential to note that while these are the general requirements for accredited investor qualification, additional criteria may be applicable based on the nature of the offering and the issuer's specific circumstances. For instance, certain knowledge-based or professional certifications might also qualify individuals as accredited investors. Regarding the verification requirements, South Carolina follows the principles outlined in Rule 506(c) of Regulation D. This rule mandates that issuers take reasonable steps to verify that all purchasers within a 506(c) offering are accredited investors. These verification measures are crucial to ensure compliance and prevent fraudulent activities. The verification methods acceptable under Rule 506(c) in South Carolina encompass both objective and subjective approaches. The specific verification methods may include, but are not limited to, the following: 1. Income Verification: — Reviewing tax returns, W-2s, or other valid documentation to confirm income levels. 2. Net Worth Verification: — Obtaining bank or brokerage statements, credit reports, property valuation reports, or other relevant financial documents for assessing net worth. 3. Third-Party Documentation: — Accepting written confirmation from a registered broker-dealer, attorney, CPA, or investment adviser that reasonably demonstrates accredited investor status. 4. Knowledge-Based Verification: — Evaluating certifications, professional licenses, or other credentials that demonstrate expertise and qualification as an accredited investor. Issuers need to maintain records demonstrating the steps taken in verifying accredited investor status. While the specific verification measures may vary based on the circumstances of the offering, issuers must exercise diligence and ensure compliance with South Carolina securities regulations. By adhering to these South Carolina accredited investor qualification and verification requirements, issuers can confidently conduct Reg D, Rule 506(c) offerings within the state while allowing for general solicitation and advertising.

South Carolina Accredited Investor Qualification and Verification Requirements for Reg D, Rule 506© Offerings In South Carolina, accredited investor qualification and verification requirements for Reg D, Rule 506(c) offerings are established to ensure compliance with securities regulations. These requirements aim to protect both investors and issuers participating in private offerings, specifically those that allow for general solicitation and advertising. To qualify as an accredited investor in South Carolina, individuals and entities must meet certain criteria based on their income, net worth, and professional experience. The specific requirements are outlined below: 1. Income-Based Qualification: — Individuals must have an annual income of at least $200,000 for the past two years, or $300,000 jointly with a spouse. — Entities, such as corporations, partnerships, or LCS, can qualify if they have total assets exceeding $5 million. 2. Net Worth-Based Qualification: — Individuals must have a net worth exceeding $1 million, either individually or jointly with a spouse. Primary residence value is excluded from the calculation. — Entities can qualify if they are comprised of equity owners each meeting the individual net worth requirement. It is essential to note that while these are the general requirements for accredited investor qualification, additional criteria may be applicable based on the nature of the offering and the issuer's specific circumstances. For instance, certain knowledge-based or professional certifications might also qualify individuals as accredited investors. Regarding the verification requirements, South Carolina follows the principles outlined in Rule 506(c) of Regulation D. This rule mandates that issuers take reasonable steps to verify that all purchasers within a 506(c) offering are accredited investors. These verification measures are crucial to ensure compliance and prevent fraudulent activities. The verification methods acceptable under Rule 506(c) in South Carolina encompass both objective and subjective approaches. The specific verification methods may include, but are not limited to, the following: 1. Income Verification: — Reviewing tax returns, W-2s, or other valid documentation to confirm income levels. 2. Net Worth Verification: — Obtaining bank or brokerage statements, credit reports, property valuation reports, or other relevant financial documents for assessing net worth. 3. Third-Party Documentation: — Accepting written confirmation from a registered broker-dealer, attorney, CPA, or investment adviser that reasonably demonstrates accredited investor status. 4. Knowledge-Based Verification: — Evaluating certifications, professional licenses, or other credentials that demonstrate expertise and qualification as an accredited investor. Issuers need to maintain records demonstrating the steps taken in verifying accredited investor status. While the specific verification measures may vary based on the circumstances of the offering, issuers must exercise diligence and ensure compliance with South Carolina securities regulations. By adhering to these South Carolina accredited investor qualification and verification requirements, issuers can confidently conduct Reg D, Rule 506(c) offerings within the state while allowing for general solicitation and advertising.