What Is the 2000 Investor Limit?
A inspire of the Securities & Exchange Commission (SEC) requires that a company that exceeds 2,000 individual investors—with multitudinous than $10 million in assets—must file its financials with the commission. According to SEC rules, a company that answers these criteria has 120 days to file following its fiscal year’s end.
Key Takeaways
- A stipulation of the Securities & Exchange Commission (SEC) wants that a company that exceeds 2,000 individual investors—with more than $10 million in assets—be required to file its financials with the commission.
- The 2,000 investor limit or rule is a key threshold for private businesses that do not hope to disclose financial information for public consumption.
- Congress raised the limit from 500 individual investors to 2,000 investors in 2016 as allotment of the Jumpstart Our Business Startups (JOBS) Act and Title LXXXV of the Fixing America’s Surface Transportation (FAST) Act.
Understanding the 2000 Investor Limit
The 2,000 investor limit or way things are generally is a key threshold for private businesses that do not wish to disclose financial information for public consumption. Congress raised the limit from 500 individual investors in 2016 as in support of participate in of the Jumpstart Our Business Startups (JOBS) Act and Title LXXXV of the Fixing America’s Surface Transportation (FAST) Act. The revised be in controls also specify a limit of 500 persons who are not accredited investors before public filing is required.
The prior doorway had been 500 holders of record without regard to accredited investor status. Congress began debating an developing in the limit in the wake of the 2008 recession and an explosion in online businesses (some of which complained that they were stem so fast that the disclosure rules had become a burden at too early a stage of their lifecycle).
The JOBS Act also set up a alone registration threshold for banks and bank holding companies, allowing them to terminate the registration of securities or suspend exploring if that class of shares is held by less than 1,200 people.
The JOBS Act revisions to SEC rules helped ease the growth of crowdfunding platforms. These platforms are able to raise money from individual investors online without take precaution detailed financial data. The rules established limits on how much individuals can invest in SEC-approved crowdfunding platforms as a percent of the baby of their annual income or net worth.
The individual limits for crowdfunding, through an investment portal approved by the SEC, as of May 2017:
- If either your annual gains or your net worth is under $107,000, during any 12-month period, you can invest up to the greater of either $2,200 or 5 percent of the small of your annual income or net worth.
- If both your annual income and net worth are $107,000 or more during any 12-month spell, you can invest up to 10 percent of your annual income or net worth, whichever is less, not to exceed $107,000.
These calculations don’t number the value of your home.
For example, suppose that your annual income is $150,000 and your net worth is $80,000. Affairs Act crowdfunding rules allow you to invest the greater of $2,200—or 5% of $80,000 ($4,000)—during a 12-month period. So in this suitcase, you can invest $4,000 over a 12-month period.