The Wholesale Client Test: Who Actually Qualifies?

Almost every question about a wholesale fund eventually collapses into one: is this person actually a wholesale client? It's the gate. Whether the scheme must be registered, what you must disclose, which licence authorisations you need, whether you need a responsible entity — all of it turns on who invests. Get it right and you're in a materially lighter regime. Get it wrong, even once, and the whole structure moves.

Why this is the gate

The wholesale/retail line is the single most consequential distinction in the whole structure. If every investor is a wholesale client:

• The scheme is generally exempt from registration with ASIC, so no responsible entity is required.
• You offer through an information memorandum, not a Product Disclosure Statement.
• You avoid retail obligations such as a Target Market Determination and AFCA membership.
• The licence authorisations you need are wholesale-only, which is a lighter licensing burden.

If even one retail investor gets in, that lighter regime can fall away. This is why, as we set out in how to set up a wholesale fund, confirming wholesale status is Step 1 — not a box you tick at the end.

The tests: how someone qualifies

Under sections 761G and 761GA of the Corporations Act, a person is a wholesale client if any one limb is satisfied. You don't need to meet several — but the one you rely on must genuinely be met, and you must be able to prove it.

1. The size of the investment — $500,000 or more

If the investment in the fund is $500,000 or more, the client is generally wholesale for that product. This limb looks at the size of the investment, not the wealth of the investor.

A useful wrinkle: once you're in on this basis, you remain a wholesale client even if the value of your interest later falls below $500,000 (Corporations Regulation 7.1.27). A market downturn doesn't quietly turn your investor retail.

2. The accountant's certificate — $2.5m net assets or $250k income

A person is generally wholesale where, before the units are issued, they give you a certificate from a qualified accountant — no more than two years old — stating that they have:

• net assets of at least $2.5 million; or
• gross income of at least $250,000 for each of the last two financial years.

Two practical points that are widely missed:

• In working out a person's assets or income, you can count the assets or income of a company or trust they control.
• A person who meets this test can acquire the units through a company or trust they control — they don't have to invest in their own name.

See Corporations Regulations 7.1.28, 7.6.02AB and 7.6.02AC, and ASIC's guidance on certificates issued by a qualified accountant, which confirms both figures and the two-year life of a certificate.

3. Investing for a business that is not a small business

Where the investment is acquired for use in connection with a business that is not a small business, the client can be wholesale on that basis. The Act defines it precisely (s 761G(7)(b) and (12)):

• a business that manufactures goods and employs fewer than 100 people; or
• any other business that employs fewer than 20 people,

…is a small business. Employ more than that, and the business is not small — and the limb can be satisfied.

4. Professional investors

Some investors are wholesale by status, with no certificate required (s 761G(7)(d), and the definition of "professional investor" in s 9). This limb is broader than most people realise. It includes a person who:

• holds an Australian financial services licence;
• is a body regulated by APRA — a bank, general insurer, life company, credit union or friendly society;
• is the trustee of a superannuation fund, ADF, PST or public sector superannuation scheme with net assets of at least $10 million;
• is registered under the Financial Corporations Act 1974;
• controls at least $10 million — including anything held by an associate, or under a trust they manage;
• is a listed entity, or a related body corporate of one;
• is a public authority, instrumentality or agency of the Commonwealth, a State or a Territory;
• is a company or unincorporated body carrying on a business of investment in financial products, interests in land or other investments, that invests funds received following an offer to the public;
• is a foreign entity that would fall within one of the above if it were established in Australia.

5. Related bodies corporate

A related body corporate of a company that is a wholesale client under any of the above tests is itself generally a wholesale client (s 761G(4A), inserted by reg 7.6.02AD).

6. The sophisticated investor route (s 761GA)

Separately, a licensee can treat a person as a sophisticated investor where it has reason to be satisfied that the person has experience in using financial services and investing in financial products. It's not a shortcut — it has real mechanics:

• the licensee must give the client a written statement of its reasons for being satisfied; and
• the client must sign a written acknowledgement that they have not been given a Product Disclosure Statement, and that the licensee has no obligation to them as a retail client.

Because it rests on the licensee's judgement rather than an objective threshold, it carries more risk than the other limbs, and should be used with care and advice.

The tests at a glance

Only one route needs to be satisfied — but it must actually be satisfied, and you must be able to show it.

The trap: an accountant's certificate expires

This is the operational failure we see most often, and it's entirely avoidable.

ASIC's guidance is that a certificate from a qualified accountant is valid for up to two years after it was issued. If you onboarded an investor on a certificate three years ago and you're still treating them as wholesale on that basis, you are relying on a stale certificate.

The 2001 problem: why more people qualify than you'd think

Here's the part that catches people out. These thresholds have not changed since 2001. They were never indexed to inflation.

Two decades of inflation and asset price growth later, a $2.5 million net assets test captures a very different slice of the population than it did when it was written. Someone with a paid-off home in a capital city and a reasonable superannuation balance can clear it — without being anything like the sophisticated, well-resourced investor Parliament had in mind.

The reform was actively considered, and rejected. ASIC argued for raising the bar, with a submission contemplating net assets of $4.5 million and income of $450,000 to reflect inflation. But the Parliamentary Joint Committee on Corporations and Financial Services ruled out an increase in its February 2025 report, finding no compelling reason to change the thresholds.

So the 2001 figures stand. For a manager, that cuts both ways: your pool of eligible investors is larger than the drafters intended — and so is the pool of people who technically qualify but may not truly understand what they're buying. The tests are a legal gate, not a judgment about suitability.

What happens if you get it wrong

If a retail investor ends up in a fund built for wholesale clients, the consequences aren't cosmetic. The wholesale exemption from scheme registration can fall away, and retail obligations can be triggered — registration, a responsible entity, a PDS, a Target Market Determination, AFCA membership, and retail licence authorisations you almost certainly don't hold.

That's not a problem you fix with an apology. It's why wholesale status must be confirmed and documented before you accept the money — not reconstructed afterwards.

Where an integrated platform fits

Confirming wholesale status is one of the responsibilities that stays with the manager — and it should. You know your investors. What a licensed platform does is make sure the obligation is actually operationalised: that certificates are collected, held, dated and re-checked, and that the scheme they're investing in is structured and licensed for wholesale clients in the first place.

Providence Equity Holdings acts as trustee, issuer and operator of the scheme and provides the compliance and operational framework, while you run the strategy as an authorised representative. → Managed Scheme & Trustee Infrastructure

Frequently asked questions

Related reading: How to set up a wholesale fund in Australia — the eight steps, in order. What does it cost? — the two routes, with real numbers. And own AFSL vs authorised representative — how to choose your licensing route.

Sources & further reading

Figures stated as at 12 July 2026. Thresholds and requirements can change — for the authoritative and current position, see:

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