What is
a MIC
A Mortgage Investment Corporation (MIC) is an investment and lending corporation designed specifically for mortgage lending in Canada. Investors pool their money by buying shares in a MIC and the MIC lends those funds to borrowers who provide their real estate as security.
Mortgage Investment Corporations (“MICs”) are special entities allowed under Section 130.1 of the Canadian Income Tax Act (the “Act”). MICs allow individuals to invest their capital in mortgage loans, benefitting from the risk mitigation provided by a large, diversified portfolio. The Act requires that 100% of a MIC’s annual net income, as verified by external audit, be distributed to its shareholders by way of dividends (income distributions). These distributions are taxed as interest income in the investors’ hands and essentially represent a flow-through of the interest earned by the MIC’s mortgage portfolio. These distributions can be taken in cash or re-invested in new shares of the MIC.
Advantages of investing in a MIC
MIC’s have grown in popularity as a great alternative source of fixed income investing. Assuming the fund underwriters are doing their due diligence, some of the advantages of investing in a MIC are as follows
How are MIC’s regulated
Regulatory changes implemented in 2019 provided certain regulatory obligations for MICs and dictate how they can raise capital from the public.
“On February 15, 2019, the British Columbia Securities Commission permanently rescinded British Columbia Instrument 32-517 – Exemption from Dealer Registration Requirement for Trades in Securities of Mortgage Investment Entities, which allowed for a dealer registration exemption for mortgage investment entities.”
MICs now face oversight from their Mortgage Brokerage Licensing as well as Securities Licensing where they require registration or assistance of an Exempt Market Dealer (“EMD.”)
Some MICs have internalized their EMDs, by setting up affiliated entities or having their management company register as an EMD. Other MICs have outsourced this function, hiring only Third-Party EMDs.
Affiliated EMDs are known as “Connected & Related Issuers,” and these EMDs usually raise money for that MIC with which they are associated. Third-Party EMDs raise money for multiple exempt products, often including more than one MIC.
Diversifi Alternative Investments Ltd is one such independent and arms length 3rd party EMD entity
Introducing Diversifi Alternative Investments Ltd.
Diversifi was incorporated with a single goal in mind. We offer well researched, unique, creative and risk adjusted investment offerings, not typically available via traditional investment channels.
