TransWikia.com

What is the name for a company formed only to make an investment?

Personal Finance & Money Asked on February 20, 2021

What do you call it when someone gets X number of people who all want to invest in Y company; so u create a corp where equity is spread among them, and this corp invests in X company?

Sounds like an investment company:

An investment company is a corporation or trust engaged in the business of investing the pooled capital of investors in financial securities. This is most often done either through a closed-end fund or an open-end fund (also referred to as a mutual fund). In the U.S., most investment companies are registered with and regulated by the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940.

2 Answers

Perhaps this might be what you're after. For the USA, from Wikipedia:

Investment clubs are generally formed as general partnerships, but could also be formed as limited liability companies, limited liability partnerships, corporations, or sole proprietorship that transfer real estate assets to a group living trust (similar to a family trust). While an investment club could incorporate, the double tax treatment on corporate distributions makes the corporate structure less desirable than a partnership except in the case when a C Corporation pays out qualified dividends after deducting allowable expenses. Typically, a general partnership does not generate any tax liability on its own; instead, any tax liability is passed through to members each year. However, income taxes are generally much higher than taxes on qualified dividends.

In order to understand the legal structure that an investment club should choose, the club should first understand its club type. Each of the different club types will have different legal requirements as well as different reporting requirements. Typically, the SEC only requires reporting for investment groups with over 100 members, which is reclassified as an investment group, not an investment club. Publicly held offerings like a Real Estate Investment Trust as known as a REIT also have additional reporting requirements.

Correct answer by Bob Baerker on February 20, 2021

This is a somewhat US-centric answer.

The above differ by the how/what/why of their investment.

If you are looking for a generic term, I think holding company could work.

Answered by Flux on February 20, 2021

Add your own answers!

Ask a Question

Get help from others!

© 2024 TransWikia.com. All rights reserved. Sites we Love: PCI Database, UKBizDB, Menu Kuliner, Sharing RPP