What is a registered investment company?

The registered investment company is an investment company that is registered in the United States at the Securities and Stock Exchange Commission (SEC). Registration requirements are governed by the Investment Company Act of 1940. Once an investment company in the United States has at least $ 30 million in US dollars (USD), it must register with SEC to become a registered investment company. Companies with $ 25 million USD managed to register, but they may not do it until their assembly of their assets reaches Prague $ 30 million. Smaller companies can register with their State Securities Commission.

In response to the 1929 stock market, which caused great depression, the US Congress passed the 1933 securities Act and the 1934 securities Act. This led to the law of an investment company1940, which was designed to protect investors from ruthless advisors and standardize the requirements for companies offering mutual funds and other investment products.

The

Investment Company Act defines how the registered investment company can charge for its services, documents that they must submit with SEC, and its trust responsibility to its clients. Investment companies are companies that provide mutual funds that are also called open funds, as well as closed and unit investment funds. In particular, the Investment Company Act defines the parameters of the division of income, the fees structure and the diversification of assets for the registered investment company. Companies that do not comply with these regulations risk losing their status of registered investment companies.

Cetypes of RTain companies are excludedof the regulations of the Investment Company Act of 1940 and therefore do not have to be registered investment companies. These include private investment funds with less than 100 investors. Hedge funds often fall into this category and therefore do not have to be registered as a registered investment company. Investment clubs usually do not have to register for SEC unless they offer their own investment products and have more than 100 members. For this reason, investment clubs tend to maintain their membership relatively small so that they do not have to register. Companies with their headquarters outside the US tend to register because the requirements for foreign companies are somewhat difficult.