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Definition of Professional Client:

Authorised or Regulated Professional Clients are defined as follows:
1. an entity required to be authorised or regulated to operate in the financial markets. The following list includes all authorised entities carrying out the characteristic activities of the entities mentioned, whether authorised by an EEA State or a third country and whether or not authorised by reference to a directive:
  1. a credit institution;
  2. an investment firm;
  3. any other authorised or regulated financial institution;
  4. an insurance company;
  5. a collective investment scheme or the management company of such a scheme;
  6. a pension fund or the management company of a pension fund;
  7. a commodity or commodity derivatives dealer;
  8. a local;
  9. any other institutional investor;
Professional Clients that are NOT Authorised or Regulated are defined as follows:
1. in relation to MiFID or equivalent third country business (the business of a third country investment firm carried on from an establishment in the United Kingdom that would be MiFID business if that firm were a MiFID investment firm) a large undertaking meeting two of the following size requirements on a company basis:
  1. Balance sheet total of EUR 20 million
  2. Net Turnover of EUR 40 million
  3. Own funds of EUR 2 million
2. in relation to business that is not MiFID or equivalent third country business a large undertaking meeting any of the following conditions:
  1. a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) (or has had at any time during the previous two years) called up share capital or net assets' of at least £5million (or its equivalent in any other currency at the relevant time);
  2. an undertaking that meets (or any of whose holding companies or subsidiaries meets) two of the following tests:
    1. a balance sheet total of EUR 12.5 million;
    2. a net turnover of EUR 25 million;
    3. an average number of employees during the year of 250;
  3. a partnership or unincorporated association which has (or has had at any time during the previous two years) net assets of at least £5 million (or its equivalent in any other currency at the relevant time) and calculated in the case of a limited partnership without deducting loans owing to any of the partners;
  4. a trustee of a trust (other than an occupational pension scheme, small self administered scheme, personal pension scheme or stakeholder pension scheme) which has (or has had at any time during the previous two years) assets of at least £10 million (or its equivalent in any other currency at the relevant time) calculated by aggregating the value of the cash and designated investments forming part of the trust's assets, but before deducting its liabilities;
  5. a trustee of an occupational pension scheme or SSAS, or a trustee or operator of a personal pension scheme or stakeholder pension scheme where the scheme has (or has had at any time during the previous two years):
    1. at least 50 members; and
    2. assets under management of at least £10 million (or its equivalent in any other currency at the relevant time);
  6. a local authority or public authority.

Definition of Eligible Counterparties:

Per se eligible counterparties
Each of the following is a per se eligible counterparty (including an entity that is not from an EEA state that is equivalent to any of the following) unless and to the extent it is given a different categorisation under this chapter:
1. an investment firm;
2. a credit institution;
3. an insurance company;
4. a collective investment scheme authorised under the UCITS Directive or its management company;
5. a pension fund or its management company;
6. another financial institution authorised or regulated under EU legislation or the national law of an EEA State;
7. an undertaking exempted from the application of MiFID under either Article 2 (certain own account dealers in commodities or commodity derivatives) or Article 2 (locals) of that directive;
8. a national government or its corresponding office, including a public body that deals with the public debt;
9. a central bank;
10. a supranational organisation.
Elective eligible counterparties
A firm may treat a client as an elective eligible counterparty if:
1. the client is an undertaking and:
  1. is a per se professional client (except for a client that is only a per se professional client because it is an institutional investor under COBS 3.5.2 R ) and, in relation to business other than MiFID or equivalent third country business:
    1. is a body corporate (including a limited liability partnership) which has (or any of whose holding companies or subsidiaries has) called up share capital of at least £10 million (or its equivalent in any other currency at the relevant time);
    2. meetsthe criteria in the rule on meeting two quantitative tests (COBS 3.5.2 R);
  2. requests such categorisation and is an elective professional client, but only in respect of the services or transactions for which it could be treated as a professional client;
2. the firm has, in relation to MiFID or equivalent third country business, obtained express confirmation from the prospective counterparty that it agrees to be treated as an eligible counterparty.

Definition of Qualified Purchaser:

"Qualified Purchaser" under the Investment Company Act of 1940 as amended is generally defined as follows:
1. An individual (including any natural person who holds a joint, community property or other shared ownership interest with that person’s spouse) who holds at least $5,000,0000 in Investments;
2. A family company defined as a legal entity or other organized group of persons that is wholly owned directly or indirectly by or for two or more individuals who are related as family members, that owns at least $5,000,000 in Investments;
3. A trust not covered by the above family company that is not formed for the specific purpose of investing and of which each trustee who makes investment decisions on behalf of the trust and each contributor is otherwise a Qualified Purchaser;
4. A person, acting for its, his or her own account or the accounts of other Qualified Purchasers, who owns and invests on a discretionary basis at least $25,000,000 in Investments;
5. A company (regardless of the amount of such company's Investments) beneficially owned exclusively by Qualified Purchasers.
6. A “qualified institutional buyer” (as defined in SEC Rule 144A) that meets, if applicable, the dealer and employee benefit plan requirements;
7. A “Charitable Corporation” of which all of the persons who have contributed assets are related that owns not less than $5,000,000 in Investments, and was not formed for the specific purpose of investing; or
8. A “Charitable Corporation” of which each person authorized to make investment decisions, and each person who has contributed assets, is a “qualified purchaser” and was not formed for the specific purpose of investing.
"Investments" means the following:
1. Securities, including stocks, bonds and notes, other than securities of an issuer that controls, is controlled by or is under common control with the prospective qualified purchaser (e.g., an interest in a family-owned or closely-held business). Notwithstanding the foregoing, Investments includes securities held in
  1. any company that files reports under the Securities Exchange Act of 1934 or has a class of securities that are listed on a “designated offshore securities market,”
  2. any registered or unregistered investment company or commodity pool and
  3. any private company with shareholders’ equity of not less than $50 million.
2. Real estate held for investment purposes. Real estate is not held for investment purposes if it is used by the prospective qualified purchaser or a related person for personal purposes or as a place of business, or in connection with the conduct of the trade or business of the prospective qualified purchaser or a related person; provided that real estate owned by a prospective qualified purchaser who is engaged primarily in the business of investing, trading or developing real estate in connection with such business may be deemed to be held for investment purposes. Residential real estate shall not be deemed to be used for personal purposes if deductions with respect to such real estate are not disallowed by section 280A of the Internal Revenue Code of 1986, as amended.
3. Commodity interests, namely commodity futures contracts, options or commodity futures and options on physical commodities traded on a contract market or board of trade, held for investment purposes. A commodity interest or physical commodity owned, or a financial contract entered into, by a prospective qualified purchaser who is engaged primarily in the business of investing, reinvesting, or trading in commodity interests, physical commodities or financial contracts in connection with such business may be deemed to be held for investment purposes.
4. Physical commodities (e.g., gold and silver), with respect to which futures contracts are traded on a contract market or board of trade, held for investment purposes (see c above).
5. Financial contracts (e.g., swaps and similar individually negotiated financial transactions), other than securities, held for investment purposes (see C above).
6. In respect of a prospective qualified purchaser which is an excepted investment company or a commodity pool, any amounts payable to such prospective qualified purchaser pursuant to a firm agreement or similar binding commitment pursuant to which a person has agreed to acquire an interest in, or make capital contributions to, the prospective qualified purchaser upon demand.
7. Cash and cash equivalents (e.g., foreign currencies, bank deposits, certificates of deposit, bankers acceptances and the net cash surrender value of an insurance policy) held for investment purposes. Neither cash used by an individual to meet everyday expenses nor working capital used by a business is considered cash held for investment purposes.

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