Alternative Investments
What is a Mortgage Investment Corporation (MIC)?
A Mortgage Investment Corporation (MIC) in Canada is a specialized investment fund focused on providing mortgages, primarily on residential properties, with the goal of generating income for its investors. MICs pool capital from multiple investors and use it to fund mortgages, typically offering an alternative to traditional bank financing. They are particularly popular for lending to borrowers who may not qualify for conventional loans due to credit issues or unique property types.
MICs are structured to allow investors to earn income through mortgage interest and fees, and by law, they must distribute 100% of its net income their earnings to shareholders. They are regulated under the Income Tax Act of Canada, Section 130.1.
Advanced Mortgage Investment Corp (Advanced MIC) is committed to delivering steady and above-average investment returns for its shareholders by maintaining a professionally managed portfolio. The management team, including the experienced mortgage underwriters, brings a wealth of knowledge in real estate and mortgage markets, ensuring well-informed investment decisions.
Income Tax Act Rules for MICs
In order to qualify as a MIC for a taxation year, a company will have to satisfy all of the following criteria throughout that taxation year:
The company must be a Canadian corporation as defined under the Tax Act.
Its only undertaking must have been the investing of its funds and not management or development of any real property.
None of the property of the company may have consisted of:
debts owing to the company that were secured on real property situated outside Canada;
debts owing to the company by non-resident persons, except any such debts that were secured on real property situated in Canada;
shares of the capital stock of companies not resident in Canada; or
real property situated outside of Canada, or any leasehold interests in such property.
The company must have had at least 20 shareholders, and no one shareholder together with a person “related” to the shareholder within the meaning of the Tax Act (a “Related Person”) owned, directly or indirectly, at any time, more than 25% of any class or series of the issued shares of the company.
Any holders of preferred shares had the right after payment to them of their dividends, and payment of dividends in a like amount per share to the holders of common shares of the Corporation (the “Common Shares”), to participate pari passu with holders of the Common Shares in any further payment of dividends.
The cost amount (as defined in the Tax Act) to the company of such of its property consisting of:
loans secured, whether by mortgages, hypothecs or in any other manner, on houses (as defined in the National Housing Act) or on property included within a housing project; and
amounts of any deposits standing to the corporation’s credit in the records of:
a bank or other corporation any of whose deposits are insured by the Canada Deposit Insurance Corporation or the Régie de l’assurance-dépôts du Québec, or
a credit union,
plus the amount of any cash on hand must at all times be at least 50% of the cost amount to it of all of its property.
The cost amount of all real property, including any leasehold interests in such property, will at no time exceed 25% of the cost amount of all of its property (excluding any real property acquired after default made on a mortgage, hypothec or agreement of sale of real property whether it be by way of foreclosure or otherwise).
Liabilities at any time in the year must not exceed three times the amount by which the cost amount to it of all of its property exceeds its liabilities, if at any time in the year the cost amount of the properties referred to above under item 6 (50% asset test) is less than two thirds of the cost amount of all of its property. However, where at any time in the year the cost amount of the properties referred to above under item 6 (50% asset test) is equal to two thirds or more of the cost amount of all of its property, the liabilities must not exceed five times the excess of the cost amount of all of its property over such liabilities.
Role of the Exempt Market Dealer (EMD)
In Canada, and specifically in Ontario, regulators have increased their review and oversight of alternative investments sold to individual investors by exempt market dealers.
- An exempt market dealer (or EMD) is a category of securities dealer set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
- It is the obligation of the EMD to review a potential investor’s “Know Your Client” application to determine suitability of an investment for that investor.
- Before opening an account with Advanced MIC, you will meet with one of the registered dealing representatives from Advanced Capital Corp. (ACC).
- ACC is a registered exempt market dealer and is the agent for AMIC. ACC is a related and connected company to AMIC by virtue of shared ownership and control.
- Your ACC dealing representative will review your financial goals and will help determine if an investment in AMIC shares is suitable for you.
