A mortgage investment corporation (MIC) is an issuer and lending institution which:
What is a Mortgage Investment Corporation?
Offers shares of the corporation to investors
Invests the proceeds from the offering into mortgage secured by real property by lending to mortgage borrowers
MIC shareholders receive income from the MIC mortgage pool. In essence, the debt payments that the borrower makes on their mortgages are flowed through to the shareholders of the MIC. Additional revenue may be generated from various fees paid by the borrower throughout the life of their mortgage.
MICs are flow-through investments, meaning that tax is not paid by the corporation. Rather, income is flowed through to the investors. The criteria for eligibility for MICs, under the Tax Act (Canada), are summarized below:
Distribution of Mortgage Investment Corporations
Most commonly, MICs are offered to investors under exemptions from prospectus requirements. As with all securities offered in the exempt market, MICs are distributed primarily by way of an offering memorandum (OM) and may only be purchased by certain investors who qualify for exemption (e.g. accredited investor (AI) exemption, eligible investors under the OM exemption, or the family, friends or business associates (FFBA) exemption).