ANNEX II

SOPHISTICATED INVESTORS FOR THE PURPOSE OF THIS REGULATION

I.   Identification criteria

A sophisticated investor is an investor who possesses the awareness of the risks associated with investing in capital markets and adequate resources to undertake those risks without exposing itself to excessive financial consequences. Sophisticated investors may be categorised as such if they meet the identification criteria set out in this Section, and if the procedure set out in Section II is followed.

The following natural and legal persons shall be regarded as sophisticated investors in all services offered by crowdfunding service providers in accordance with this Regulation:

(1)	Legal persons meeting at least one of the following criteria: (a) own funds of at least EUR 100 000; (b) net turnover of at least EUR 2 000 000; (c) balance sheet of at least EUR 1 000 000.

(2)

Natural persons meeting at least two of the following criteria: (a) personal gross income of at least EUR 60 000 per fiscal year, or a financial instrument portfolio, defined as including cash deposits and financial assets, that exceeds EUR 100 000; (b) the investor works or has worked in the financial sector for at least one year in a professional position which requires knowledge of the transactions or services envisaged, or the investor has held an executive position for at least 12 months in a legal person as referred to in point (1); (c) the investor has carried out transactions of a significant size on the capital markets at an average frequency of 10 per quarter, over the previous four quarters.

II.   Request for being treated as a sophisticated investor

Crowdfunding service providers shall make available to their investors a template that they may use to submit a request to be treated as a sophisticated investor. The template shall contain the identification criteria set out in Section I and a clear warning specifying the investor protection that a sophisticated investor will lose as a consequence of being classified as such.

A request to be treated as a sophisticated investor shall contain the following items:

(1)	An attestation specifying the identification criteria set out in Section I that the requesting investor meets;

(2)	A statement that the requesting investor is aware of the consequences of losing the investor protection attached to the status of non-sophisticated investors;

(3)	A statement that the requesting investor remains liable for the veracity of the information provided in the request.

The crowdfunding service provider shall take reasonable steps to ensure that the investor qualifies as a sophisticated investor and shall implement appropriate written internal policies to categorise investors. The crowdfunding service provider shall approve the request unless it has reasonable doubts that the information provided in the request is correct. The crowdfunding service provider shall explicitly notify investors when their status is confirmed.

The approval referred to in the third paragraph shall have a validity of two years. Investors that wish to maintain their sophisticated investor status after the expiry of the period of validity shall submit a new request to the crowdfunding service provider.

Sophisticated investors shall be responsible for keeping the crowdfunding service provider informed of any change which could affect their categorisation. Where the crowdfunding service provider becomes aware that the investor no longer fulfils the initial conditions which made the investor eligible for being treated as a sophisticated investor, the crowdfunding service provider shall inform the investor that he or she will be treated as a non-sophisticated investor.

III.   Sophisticated investors that are professional clients

By way of derogation from the procedure set out in Section II of this Annex, entities referred to in points (1) to (4) of Section I of Annex II to Directive 2014/65/EU shall be regarded as sophisticated investors if they provide proof of their status of professionals to the crowdfunding service provider.