Mutual funds are not just a type of investment, but are actually legal entities, often formed as a business trust or corporation. Although organized under a number of different state laws, many registered funds organize under the corporate laws of the state of Maryland or the business trust laws of the state of Massachusetts or Delaware.

Primarily because of the Investment Company Act, each mutual fund is usually structured like a corporation in that it has a separate legal existence, a board of directors, officers and shareholders, etc. The Board is primarily responsible for preventing financial adviser abuse and, just as with a standard corporation, a mutual fund's investors are generally limited in liability to the extent of their investments.

Mutual funds do not generally have investment advisers on their payrolls, but rather, enter into contracts with these individuals. The advisers must be registered under the Investment Adviser Act, while the mutual funds are usually regulated under the Investment Company Act.

Many mutual funds have a multi-class structure, meaning a registered investment company issues different classes of shares. These are usually defined as "Class A" shares, which normally have a front-end sales load, "Class B" shares which have a contingent/deferred sales load, and "Class C" shares that have a level-load structure.

For more information about the different types of mutual funds and the laws pertaining to them, please refer to the materials below. Additionally, should you require the assistance of a legal professional experienced with this form of investment, please turn to the "Law Firms" page here at HG.org.

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