Sophisticated vs non-sophisticated investor: what's the difference?

Due to the change in the legal status of our profession, the investor questionnaire has changed. This questionnaire makes it possible to find out whether you are considered to be an "informed" investor or a "non-informed" investor in accordance with the European regulation on European providers of participative financing services. If you are qualified as a non-advised investor, you will then be provided with a tool to simulate your ability to bear the losses associated with an investment made on the Enerfip platform.

When does a person qualify as an informed investor?

Natural and legal persons\\ can be qualified as "informed investors". The term "sophisticated" refers to the risk warning:

An informed investor is a person who is aware of the risks associated with capital market investments and who has sufficient resources to assume these risks without exposing himself to excessive financial consequences.

These exhaustive criteria, are set out in the European regulation.

Criteria for a natural person to qualify as a sophisticated investor

An individual may qualify as a sophisticated investor if he or she meets at least two of the following criteria:

• Gross personal income of at least EUR 60,000 per tax year or a portfolio of financial instruments, defined as including cash deposits and financial fixed assets, the value of which exceeds EUR 100,000.
• The investor has been engaged for at least one year, or has been engaged for at least one year, in a professional activity in the financial sector that requires knowledge of the transactions or services envisaged, or the investor has held a senior management position for at least twelve months in a legal entity that qualifies as a sophisticated investor.
• The investor has carried out an average of ten transactions of a significant size per quarter over the previous four quarters on listed or unlisted investments. Transactions of EUR 1,000 or more are considered by Enerfip to be of significant size.

Criteria for a legal entity to qualify as a sophisticated investor

A legal person may qualify as a sophisticated investor if it meets at least one of the following criteria:

• equity capital of at least EUR 100,000
• net turnover of at least EUR 2,000,000
• total assets of at least EUR 1,000,000.

When does a person qualify as an unsophisticated investor?

An individual or legal entity qualifies as a non-advised investor if they do not meet the identification criteria for informed investors set out in the European regulation.

The non-advised investor is subject to a reinforced warning of the risks of investments made through the Enerfip platform.

Can a non-advised investor ask to be considered as an informed investor?

Yes, to do so, a non-advised investor must complete a form that includes the criteria for identifying informed investors as well as a clear warning specifying the protection afforded to non-advised investors. The investor must therefore :

• prove that they meet the criteria for informed investors
• declare that they are aware of the consequences of the loss of investor protection associated with the status of non-advised investor
• declare that they remain responsible for the accuracy of the information provided in the application.

The form should be sent by e-mail to [email protected]

Approval for sophisticated investor status is valid for two years. Uninformed investors who wish to maintain their informed investor status after the expiry of these two years must submit a new application to Enerfip, by sending the form again by e-mail to [email protected].

How does the risk warning work for enhanced investors?

The risk warning means that uninformed investors must be fully aware of the risks to which they are exposed when they make an investment on a participative financing platform. There are two ways of implementing this risk warning:

• knowledge testing
• simulation of the ability to bear losses.

As a first step, Enerfip asks the unsophisticated investor to complete a knowledge test to assess his or her experience, investment objectives, financial situation and basic understanding of the risks inherent in equity and other investments. This knowledge test can be updated by the investor whenever his or her situation changes or, if necessary, every two years.

As a second step, Enerfip implements a tool enabling investors to simulate their capacity to bear losses, based on the investor's net assets made up of :

• regular income and total permanent income provided by the investor in the knowledge test
• the liquid assets reported by the investor in the knowledge test (i.e. financial investments and all cash deposits, excluding personal and investment property and pension funds)
• their financial commitments, including current or future recurring commitments.

This simulation is re-evaluated each time the investor's situation changes or, if necessary, every year.

Each time an unsophisticated investor invests more than EUR 1,000 or 5% of their net assets (whichever is greater), they receive a risk warning, give their explicit consent to Enerfip and prove to Enerfip that they understand the investment and the associated risks. In any case, an investor is always free to invest in a project even if the loss simulator reveals that he or she does not have the capacity to do so. This freedom to invest is due to the fact that Enerfip is no longer an investment advisor.