A face-amount certificate company is an investment company which offers an
investment certificate as defined by the United States
Investment Company Act of 1940 The Investment Company Act of 1940 (commonly referred to as the '40 Act) is an act of Congress which regulates investment funds. It was passed as a United States Public Law () on August 22, 1940, and is codified at . Along with the Securities Exc ...
. In general, these companies issue fixed income debt securities that obligate the issuer to pay a fixed sum at a future date. They are generally sold on an installment basis.
[Lemke, Lins and Smith, ''Regulation of Investment Companies,'' ยง4.02 (Matthew Bender, 2014 ed.).]
A face-amount certificate (FAC) is a contract between an investor and an issuer in which the issuer guarantees payment of a stated (face amount) sum to the investor at some set date in the future. In return for this future payment, the investor agrees to pay the issuer a set amount of money either as a lump sum or in periodic installments. If the investor pays for the certificate in a lump sum, the investment is known as a fully paid face amount certificate.
Issuers of these investments are face-amount certificate companies. Very few face-amount certificate companies operate today because tax law changes have eliminated their tax advantages. The most notable financial services companies in the face-amount certificate business today are
Ameriprise Financial
Ameriprise Financial, Inc. is a diversified financial services company and bank holding company incorporated in Delaware and headquartered in Minneapolis, Minnesota. It provides financial planning products and services, including wealth mana ...
and
SBM Financial Group.
Along with FAC, other company types that fall under the scope of the
Investment Company Act of 1940 The Investment Company Act of 1940 (commonly referred to as the '40 Act) is an act of Congress which regulates investment funds. It was passed as a United States Public Law () on August 22, 1940, and is codified at . Along with the Securities Exc ...
are Unit Investment Trusts and Management Companies.
See also
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ICA 1940
*
US corporate law
United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance ...
Notes
Investment management
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