Face-Amount Certificate Company Law and Legal Definition

A Face-Amount Certificate Company is an investment company that is engaged or proposes to engage in business of issuing face amount certificates of the installment type. It is a kind of investment firm that issues debt securities to its investors. These securities are called face-amount certificates and are backed by security interest on assets such as real property or other securities. Such companies offer an Investment Certificate as defined by the Investment Company Act of 1940.

A face-amount certificate (FAC) is a contract between an investor and an issuer. Pursuant to the contract, the issuer guarantees payment of a stated (face amount) sum to the investor at some set date in the future. And, the investor agrees to pay the issuer a set amount of money either as a lump sum or in periodic installments in return for this future payment. If the investor pays for the certificate in a lump sum, the investment is known as a fully- paid face amount certificate.

The following is an example of a federal statute defining the term:

Pursuant to 15 USCS § 80a-4, "Face-amount certificate company" means an investment company which is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or which has been engaged in such business and has any such certificate outstanding.