A face-amount certificate company is an investment company which offers an investment certificate as defined by the Investment Company Act of 1940.
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, Inc and SBM Financial Group.
Alongside with FAC, other company types that fall under the scope of the Investment Company Act of 1940 are Unit Investment Trusts and Management Companies.
Famous quotes containing the words certificate and/or company:
“God gave the righteous man a certificate entitling him to food and raiment, but the unrighteous man found a facsimile of the same in God’s coffers, and appropriated it, and obtained food and raiment like the former. It is one of the most extensive systems of counterfeiting that the world has seen.”
—Henry David Thoreau (1817–1862)
“Whether lawyer, politician or executive, the American who knows what’s good for his career seeks an institutional rather than an individual identity. He becomes the man from NBC or IBM. The institutional imprint furnishes him with pension, meaning, proofs of existence. A man without a company name is a man without a country.”
—Lewis H. Lapham (b. 1935)