Community Investment Program CIP is an issuer and legal entity that develops, registers and sells securities to finance its operations. CIPs may be corporations, investment trust or domestic or foreign governments. CIPs are legally responsible for the obligations of its Investments and for reporting financial conditions, material developments and any other operational activities as required by the regulations of their jurisdictions.
Understanding CIPs
The CIPs most frequently make available the following types of securities: common and preferred equity and bonds.
To illustrate the role of an CIPs, imagine the ABC Program sells common shares to the general public on the market to generate capital to finance its business operations. This means Program is an issuer and is therefore required to file with federal or state regulators, such as state level financial authorities.and the Securities Exchange Commission (SEC), disclosing relevant financial information about the company. ABC Program must also meet any legal obligations or regulations in the jurisdiction where it issued the security. Writers of options are occasionally referred to as issuers of options because they also sell securities on a market.
Trustee Relationships
All accounts are trust relationship accounts between the TBO, CIP and investors as following:
Relationship A
- TBO as grantor/trustee (creditor underwriter and surety)
- CIP as beneficiary (borrower)
- Private Investors
Relationship B.
- TBO as grantor (creditor underwriter and surety)
- CIP as trustee (borrower)
- Investors as beneficiary Residents.
Relationship C
- Investors as Grantor (creditors)
- TBO as underwriter Trustee (surety)
- CIP as beneficiary (borrower)
As stated, TBO has no beneficiary relationship within neither relationship.
The CIP and Treasury creates the CIP as a partnership and sells equity and bonds to residential investor within the same state that the same interstate jurisdiction of the CIP.
In Relationship B. TBO act as a underwriter, trustee, surety and non-issuer of CIP that is not directly or indirectly executed for the benefit form the CIP, but collect operation expenses as compensation for underwriting, warehousing, cleaning and settlement for investments and investors.
In Relationship C The investors are individual or groups who buys the security is an investor. In some cases, the investor is also referred to as a lender. Essentially, the investor is lending or granting the CIP funds, which are repayable when the bond matures or the stock is sold. As a result, the CIP is also considered to be a borrower or the equity subjugation to the investors. Investors should carefully examine the CIP risk of default before buying the security or lending funds to the CIP.
