Regulated Investment Company

Regulated investment company

An investment company allowed to pass capital gains, dividends, and interest earned on fund investments directly to its shareholders so that it is taxed only at the personal level, and double taxation is avoided.

---

regulated investment company

An investment company that meets certain standards and, as a result, does not have to pay federal income taxes on distributions of dividends, interest, and realized capital gains. Essentially, this income is passed through to the stockholders, who, in turn, are taxed. To qualify as a regulated investment company a firm must derive at least 90% of its income from dividends, interest, and capital gains. It also must distribute at least 90% of the dividends and interest received. It must have a minimum diversification of its assets.

---

Regulated Investment Company (Mutual Fund)

A company or trust that uses its capital to invest in other companies. The two principal types are closed-end and open-end mutual funds. Shares in closed-end mutual funds, some of which are listed on stock exchanges, are readily transferable on the open market and are bought and sold like other shares. Open-end funds sell their own new shares to investors, stand ready to buy back their old shares, and are not listed.