General Requirements To Qualify as a RIC

The term “regulated investment company” applies to any domestic corporation that:

1. At the end of each quarter of the RIC’s tax year, at least 50% of the value of its assets must be invested in the following items:

• Cash and cash items (including receivables);

• Government securities;

• Securities of other RICs; and

• Securities of other issuers, except that the investment in a single issuer of securities may not exceed 5% of the value of the RIC’s assets or 10% of the outstanding voting securities of the issuer (except as provided in section 851(e)).

2. At the end of each quarter of the RIC’s tax year, no more than 25% of the value of the RIC’s assets may be invested in the securities of:

• Two or more issuers controlled by the RIC and engaged in the same or related trades or businesses; or

• Is registered throughout the tax year as a management company or unit investment trust under the Investment Company Act of 1940 (ICA),

• Has an election in effect under the ICA to be treated as a business development company, or

• Is a common trust fund or similar fund that is neither an investment company under section 3(c)(3) of the ICA nor a common trust fund as defined under section 584(a).