Australian Financial Services Licensees can only provide financial services to wholesale clients if the clients meet one of five eligibility tests. The five eligibility tests are classified under sections 708 and 716G of the Corporations Act. This covers:
- Product Value – the product being invested in or advised on has a value exceeding $500,000;
- Individual Wealth – a person owning net assets of $2.5 million or having a gross annual income of over $250,000 shown over two financial years, as certified by an accountant;
- Professional Investors – a range of institutional investors with specific attributes;
- Large Businesses – having more than 20 employees – or more than 100 employees if the business is or includes the manufacture of goods; and
- Sophisticated Investors – persons that an AFSL holder has determined to be experienced in using financial services.
To read more about the distinction between retail clients vs wholesale clients, read our article on Retail vs Wholesale Clients – Regulatory Concerns and Responses.