2000 Investor Limit

2000 Investor Limit

What is the 2000 investor limit

This stipulation from the Securities & Exchange Commission (SEC) requires a company that exceeds 2,000 individual investors with more than $ 10 million in assets to file its financial statements with the commission. Under SEC rules, such a business has 120 days to file after the end of its fiscal year.


The 2,000 investor limit or rule is a key threshold for private companies that do not wish to disclose financial information for public consumption. Congress raised the limit of 500 individual investors in 2020 under the Jumpstart Our Business Startups Act (JOBS) and the LXXXV title of the Fixing America’s Surface Transportation Act (FAST). The revised rules also specify a limit of 500 people who are not accredited investors before a public filing is required.

The previous threshold was 500 registered holders regardless of the status of accredited investor. Congress began to debate an increase in the limit following the 2008 recession and an explosion of online businesses, some of which complained of their growth so fast that the disclosure rules had become too much of a burden early in their life cycle. The Jobs Act also established a separate registration threshold for banks and bank holding companies, allowing them to end registration of securities or suspend reporting if this class of shares is owned by less 1,200 people.

Connection to crowdfunding

Revisions of JOBS to SEC rules have helped facilitate the growth of crowdfunding platforms, which are able to raise funds from online individual investors without providing detailed financial data. The rules set limits on the amount individuals can invest in SEC-approved crowdfunding platforms as a percentage of their annual income or net worth, whichever is less.

The individual limits of crowdfunding, via an investment portal approved by the SEC, since May 2020:

If either your annual income or your net worth is less than $ 107,000, in any 12 month period you can invest up to the greater of $ 2,200 or 5% of the lesser of your annual income or net worth.

If your annual income and net worth are $ 107,000 or more in a 12 month period, you can invest up to 10% of your annual income or net worth, whichever is less, without exceeding $ 107,000.

These calculations do not include the value of your home. FINRA has all the details on crowdfunding and income limits, as well as some tips on how to protect yourself.

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