Who has to register under the Investment Company Act?
Asked by: Ms. Lorena Cronin | Last update: February 7, 2026Score: 4.7/5 (19 votes)
Under the Investment Company Act of 1940 (ICA), companies primarily engaged in investing or trading securities, with more than 100 investors or holding significant assets in securities, must register with the SEC unless they qualify for an exemption, such as certain private funds, banks, or insurance companies. Registration involves filing detailed disclosures and adhering to strict rules on capital, governance (e.g., independent board members), and operations to protect investors.
Who is required to register as an investment company?
The Investment Company Act of 1940 Regulates the structure and operations of investment companies through a combination of registration and disclosure requirements and restrictions on day‑to‑day operations. The Investment Company Act requires the registration of all investment companies with more than 100 investors.
When must an IAR register in a state?
All states require that investment advisers (IAs) and investment adviser representatives (IARs) conducting business in the state register with the state's securities regulatory authority (or qualify for an exemption from registration). Approximately 17,500 investment advisers are so registered.
Who is subject to the Investment Advisers Act?
Who Adheres to the Investment Advisers Act? Financial advisors have to adhere to the Investment Advisers Act of 1940, which calls on them to perform fiduciary duty and act primarily on behalf of their clients.
What is an investment company under the companies Act?
(a) the expression "investment company" means a company whose principal business is the acquisition of shares, debentures or other securities]; (b) the expression "infrastructure facilities" means the facilities specified in Schedule VI. 1.
Investment Company Act of 1940 Definition
What are the 4 types of investment companies?
In United States securities regulation, there are at least five types of investment companies:
- Open-End Management Investment Companies (mutual funds)
- Face-amount certificate companies: very rare.
- Closed-End Management Investment Companies (closed-end funds)
- UITs (unit investment trusts): only issue redeemable units.
What is an entity under the Companies Act?
(k) ''entity" means any body corporate and includes, for the purposes of sections 18, 46, 47, 48, 49, 50, 52 and 53, a firm setup under the Indian Partnership Act, 1932 (9 of 1932);
Who does the investment company act apply to?
The ICA requires every investment company to register with the SEC. The definition of an investment fund is interpreted broadly, and includes all companies that are or hold themselves out to be engaged primarily in investing or trading in securities.
Who is exempt from the Dodd-Frank Act?
The Dodd-Frank Act exempts from registration "foreign private advisers," or an investment adviser that (i) has no place of business in the U.S., (ii) has, in total, fewer than 15 clients in the U.S. and investors in the U.S. in private funds advised by the adviser, (iii) has aggregate assets under management ...
What is the threshold for investment adviser registration?
For the most part, advisors cannot register with the commission unless they manage at least $100 million in assets, which makes the $25 million threshold for small entities “virtually meaningless and contrary to the legislative intent of the Reg Flex Act,” according to a letter from IAA CEO Karen Barr to the commission ...
Who needs to be an IAR?
Certain employees of federally covered advisers may be required to register as investment adviser representative . Some states include within the definition of an IAR a person (often called a solicitor) who regularly refers customers to an IA and who receives compensation for those referrals.
Can you provide investment advice without a license?
Financial advisors need specific licenses to provide investment advice and sell related products. This ensures they understand the products they are selling and the type of advice they are disseminating to clients. It also ensures they know the laws and regulations of various financial securities.
Do financial advisers need to be registered?
Financial service providers (FSPs) need to be registered on the Financial Service Providers Register. If you're providing certain financial services you also need to be either licensed or certified.
What is the difference between an investment advisor and an IAR?
A Registered Investment Advisor (“RIA”) and an Investment Advisor Representative (“IAR”) are distinctly different. A RIA is the legal entity that is formed to provide advisory services for a fee to clients. The IAR is the individual advisor(s) underneath the RIA that formally deliver the advice.
What qualifies as an investment company?
A company or fund that pools money from many investors and invests that money primarily in securities. Each investment company share represents an investor's part ownership in the fund's underlying investments and the income those investments generate.
Who is exempt from the Investment Advisers Act of 1940?
Other IA Act Exemptions
a. Banks (unless the bank advises a Registered Investment Company). b. Lawyers, Accountants, Engineers and/or Teachers whose advisory activities are solely incidental to the practice of his/her/its profession.
What are the exceptions to the Dodd-Frank Act?
Dodd Frank only applies to residential mortgage transactions secured by a dwelling. It does not apply to transactions involving commercial property, vacant land or investment property.
Where is the safest place to put money if banks collapse?
For maximum safety during a bank collapse, keep funds in FDIC/NCUA insured accounts like High-Yield Savings Accounts (HYSAs) or Money Market Accounts (MMAs) for liquidity, or consider U.S. Treasury securities (T-Bills, Notes, Bonds) and I Bonds for government backing, but diversify with options like credit unions (with NCUA insurance), Certificates of Deposit (CDs), or even physical assets like real estate for long-term stability, all while understanding "safest" involves balancing risk and access.
What is the hedge fund tax loophole?
The carried interest loophole allows investment managers to pay the lower 23.8 percent capital gains tax rate on income received as compensation, rather than the ordinary income tax rates of up to 40.8 percent that they would pay for the same amount of wage income.
Who is a beneficial owner under the Investment Company Act?
(A) Beneficial ownership by a company shall be deemed to be beneficial ownership by one person, except that, if the company owns 10 per centum or more of the outstanding voting securities of the issuer, and is or, but for the exception provided for in this paragraph or paragraph (7), would be an investment company, the ...
What is the Dodd Frank Act exemption for private funds?
Private Fund Advisers: Section 408 of the Act provides an exemption for investment advisers whose clients consist solely of “private funds,” and whose assets under management in the United States are less than $150,000,000 in the aggregate.
What does it mean to be a registered investment company?
(6) Registered investment company The term “registered investment company” means an investment company that is registered with the Commission under the Investment Company Act of 1940 [ 15 U.S.C. 80a–1 et seq.].
What are the four types of entities?
The four main types of business entities in the U.S. are Sole Proprietorship, Partnership, Limited Liability Company (LLC), and Corporation (C Corp/S Corp), each offering different structures for liability, taxation, and ownership, with Sole Proprietorships having no separation, Partnerships pooling resources, LLCs blending protection with flexibility, and Corporations being distinct legal entities.
What is the definition of a company under the Companies Act?
A company is a business entity registered under the Companies Act. It is a legal entity with a separate identity from those who are its members or operate it. Therefore it can be considered as an artificial person created by the law.In terms of the Companies Act, 2013 (Act No.
Am I an individual or legal entity?
A legal entity refers to any business, organization, or individual that's required to meet legal obligations as set by local, state, and federal laws. Think of it as a separate “person” in the eyes of the law. It can own property, sign contracts, sue or be sued, and be held accountable for its actions.