Regulated Investment Company (RIC)

Definition

In matters of the business agreements and the other issues, it is necessary that you count on the companies that are eligible to permit the interests or dividends, taxes that depend on the capital gains that are earned due to the investment of the funds. It is passed to the shareholders on a highly personal basis so that one can avoid the aspects of the double taxation to a certain extent.

Variation

This can also be defined from a different angle altogether. The Regulated Investment Company (RIC) is such kind of company that does not pay any kinds of taxes on the earnings. It is much alike the mutual funds as these are mostly the companies that are regulated by the investments. These companies hardly have any kind of real operation. Therefore, it is also possible that they can trespass the corporate taxes with the reason that they derive the profits out of the shareholders. This makes their ways easy to carry forward the profits to their most valued shareholders. There is a strict criterion that the company must follow in order to get recognition as the Regulated Investment Company (RIC). They must extract 90 percent profit to the most to acquire the tag of being such an investment company.

These companies must be transparent enough to their clients so that the dealings remain clear. The company needs to get qualified as perfect if it derives the maximum amount of share from the capital gains, interest and dividends. The assets can easily get diversified but to be specific rate of the divergence must be less enough.

Investment Company Act

It is always best to trust the regulated investment companies when it concerns your investments. The security is the most vital aspect, and this is the only sector where the shareholders can trust with their eyes closed. These companies are just apt for meeting the requirements of the clients and help them with the maximum amount of benefits out of their investments. One must have the idea that these investment companies are operated under the Investment Company Act of the year 1940 and follows such rules and regulations.