The investor’s field guide · S
Sophisticated investor
A UK self-certified status that lets someone be shown promotions for certain unlisted, high-risk investments.
Explained by the editorial team
UK rules restrict who a firm can show a promotion for certain unlisted or high-risk investments to. One route around that restriction is self-certifying as a sophisticated investor under the Financial Services and Markets Act (Financial Promotion) Order 2005 (legislation.gov.uk, Schedule 5).
The self-certification
An individual signs a dated statement confirming that at least one of four things applies to them: membership of a network of business angels for six months or more, more than one investment in an unlisted company in the past two years, recent professional work in private equity or small business finance, or a recent directorship of a company with turnover of £1 million or more. The statement is valid for twelve months from the date it is signed, after which it needs renewing.
What to examine
Self-certifying is a declaration, not a qualification someone else checks for you, so the responsibility for accuracy sits with the person signing. It is a separate route from the high net worth individual category, which is based on income or assets instead. Either status grants access to a promotion; neither says anything about whether the investment behind it is sound. The rules in this area change, so confirm the current criteria before relying on them.
General information, not investment, legal or tax advice. Examples are illustrative. Read the disclaimer.