What is a Mortgage Investment Corporation (MIC)?

Mortgage Investment Corporations (MICs) were created by the Federal Government in 1973 to allow investors to participate in a pool of mortgages secured by real property. MIC shares are a qualified investment for registered plans such as RRSP’s, RRIF’s, LIRA’s. TFSA’s and RESP’s.  MICs are a flow-through investment vehicle and as such must distribute 100% of their net income to shareholders.

In August 2018 the British Columbia Securities Commission (“BCSC”) gave notice that BCI 32-517 which granted limited relief to persons trading the securities of a mortgage investment entity (“MIE”) from having to comply with the dealer registration requirements of NI 31-103.  Effective February 15, 2019, the temporary relief was revoked and all MIE’s must either:

·       a) become registered as an exempt market dealer (“EMD”); or

·       b) use the services of a registered third-party EMD; or

·       c) cease trading securities of the MIE.

After much review and deliberation, Sierra ceased selling additional shares and continues to operate with our current share capital.

MICs are also guided by and subject to certain investment requirements, some of which are:

  • Investments must be mortgages on real property located in Canada.
  • At least 50% of the mortgages must be against residential properties and/or cash and insured deposits at CDIC member financial institutions such as banks and credit unions
  • Dividends not held within registered plans are taxed as interest income in the shareholders hands and can be distributed in cash or additional shares.