Definition
Investment Company Act of 1940
The US statute that regulates pooled investment vehicles, and which SPVs are structured to avoid.
The Investment Company Act of 1940 regulates entities whose business is investing in securities, imposing registration, governance, custody, and leverage requirements that no single-asset SPV could bear. Pooled private vehicles therefore operate inside an exclusion, most commonly section 3(c)(1), which permits up to 100 beneficial owners, or section 3(c)(7), which permits an unlimited number provided every investor is a qualified purchaser. Falling outside an exclusion is not a technicality: an unregistered investment company faces rescission rights and enforcement exposure. This is the structural reason SPVs cap investor counts, scrutinise whether nested entities should be counted through, and restrict transfers that could breach the limit.