Investment Company Act of 1940

The investment company act of 1940 was created as an Act of Congress. The purpose of this act was to ensure that investment companies have a set of guidelines that they must adhere to. The Securities and Exchange Commission regulates this by limiting filings, fees and financial disclosures on open end-mutual, close-end and traded funds. Investment companies under this act must register their business and appoint a board of directors, as long as 25 percent of the board members are not employees or investors of the company.

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