Research On Legal System Of Internal Control Of Investment Company In U.S.A

Investment companies can be divided into three principle classes, that is face-amount certificate company, unit investment trust and management company, while the last one can also be divided into open-end and closed-end companies. Open-ended company, or mutual fund is the reprsentative form of American inverstment company. Since the promulgation of Investment Company Act of 1940, the modification of inverstment company laws has experienced three main periods: from 1940 to 1974 is the first and 1975 to 2000 for the second, 2001 till now the third. In the three periods, inverstment company laws have changed from looseness to strictness and to looseness again. In loose period, the regulation of investment company is mainly embodied in direction and in strict period prevention.There is not any difference between the corporate governance of investment companies and operation companies, however, the former is radically different form the latter in operating for the former has no bussiness office, equipment or employee. The protection of the interests of shareholders is mainly depended on the system of independent directors, the fiduciary duty of investment advisers and the shareholders suit system. The internal control integrated framework of American COSO committee provided a reasonable assurance for the achievement of effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. After years' test, this framework had become the basis of current rules, regulations and laws.The internal control of investment company is mainly under the regulation of article 302 of SOX Act which requires the principal executive officer and the principal financial officer, or persons performing similar functions, certify the establishment and evaluation of disclosure controls and procedures.There are defections such as lower legislation level, conflict between policies from different gorvenment departments, indefiniteness of subjects and liability mechanism of internal control and defective funds governance in Chinese securities investment funds internal control legal system. Our reference to American investment company internal control legal sysetem should focus on its legislative ideas and value orientation.