Unaccredited Shareholder

Term Main definition
Unaccredited Shareholder

The JOBS Act amends Section 12(g) of the Exchange Act and establishes a concept called unaccredited shareholder, which is synonymous with accredited investor already holding securities.  Another difference, the determination of accredited status is made on a current basis, rather than at the time of acquisition.

Having more than 500 unaccredited shareholders results in a company being required to register securities and file reports under the Exchange Act, an onerous task.  Often companies unexpectedly exceed this limit as a result of secondary distribution of their shares.