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Simple English definitions for legal terms
GIC
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A quick definition of GIC:
A GIC, or guaranteed investment contract, is a type of investment where an investor gives their money to someone else, like a company or an insurer, and expects to make a profit without doing any work themselves. It's like giving someone money to take care of for you, and they promise to give you back your money plus some extra money at the end of a certain period of time. It's a way to make money without having to do anything yourself, but it's important to be careful and make sure you understand the risks involved.
A more thorough explanation:
Definition: GIC stands for guaranteed investment contract. It is an investment contract in which an institutional investor, such as a pension fund, invests a lump sum with an insurer. The insurer promises to return the principal amount and a certain amount of interest at the end of the contract.
Investment contract is a type of agreement or transaction in which a party invests money in expectation of profits derived from the efforts of a promoter or other third party. In such an arrangement, the investor typically does not receive the right to exercise control over the managerial decisions of the enterprise.
For example, if a pension fund invests $1 million in a GIC with an insurer, the insurer promises to return the $1 million plus a certain amount of interest at the end of the contract, regardless of the performance of the underlying investments.