Trust certificates, often referred to as TCs, are financial instruments issued by the Small Business Administration (SBA) or its authorized agents. These certificates represent ownership in a trust or a pool of debentures or participating securities. Essentially, when you hold a trust certificate, you own a portion of the underlying assets managed within the trust.
Trust certificates are primarily used in the context of small business investment and financing. They play a significant role in the SBA's programs aimed at supporting small businesses. Legal professionals may encounter trust certificates in transactions involving investment funds, securities law, and financial regulations. Users can manage certain aspects of trust certificates through legal templates provided by platforms like US Legal Forms, which are drafted by qualified attorneys.
Here are a couple of examples of abatement:
For instance, a small business may obtain financing through a trust certificate that pools funds from multiple investors. This allows the business to access capital while providing investors with a stake in the trust's assets. (Hypothetical example)
Trust certificates are governed under the Small Business Investment Company (SBIC) regulations, particularly found in Title 13 of the Code of Federal Regulations (CFR) Part 107. This part outlines the structure, issuance, and management of trust certificates.
| Term | Definition | Key Differences |
|---|---|---|
| Trust Certificates | Certificates representing ownership in a trust or pool of assets. | Focuses on pooled investments and SBA regulations. |
| Debentures | A type of debt instrument that is not secured by physical assets. | Debentures are loans to the issuer, while trust certificates represent ownership in a pool of assets. |
| Participating Securities | Financial instruments that provide holders with a share in profits or assets. | Participating securities may not be tied to a trust structure like trust certificates. |
If you are considering investing in trust certificates or are involved in a transaction that includes them, it is advisable to:
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| Attribute | Details |
|---|---|
| Issuing Authority | SBA or authorized agents |
| Type of Investment | Pooled investments in trusts |
| Regulatory Framework | Title 13 CFR Part 107 |
A trust certificate is a financial instrument that represents ownership in a trust or a pool of debentures or participating securities.