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Mortgage Investment Companies & Individual Investors

Mortgage-Investment-Company-RulesWith investors tiring of 2-4% fixed income returns, Mortgage Investment Companies (MICs) have been attracting more assets.

People are finding that certain reputable MICs have a long history of strong inflation-adjusted returns. (See: Inside Mortgage Investment Corporations.)

Yet, not everyone can invest in a MIC. And, those who can sometimes run into regulatory limits.

For insight into the rules surrounding MIC investing, we spoke with Jeremy Farr, a partner at Borden Ladner Gervais, a MIC specialist and corporate lawyer of 27 years.

“Shares in a MIC are securities and regulators have stipulations on who can buy them,” says Farr.

Generally, people in any province can buy MIC shares if they meet certain criteria, he notes. Those criteria are spelled out in two exemptions:

The accredited investor exemption

  • The investor’s income must be $200,000 in each of the last 3 years, including the current year; OR,
  • The investor’s and spouse’s income must be $300,000 combined in each of the last 3 years, including the current year; OR,
  • The investor’s net financial assets (i.e., non-real estate assets – liabilities) is $1 million or more.

The “accredited investor” declaration is made by the investor himself/herself on the “honour system,” says Farr.

The minimum investment exemption

  • Anyone can purchase MIC shares if their initial purchase is at least $150,000.
  • Subsequent purchases can be less than $150,000.

On top of the two provisions above, individual provinces have additional exemptions that allow individual investors to purchase MICs.

For residents of BC, NB, NS and NFLD

  • Investors can generally buy MIC shares in any amount as long as they receive an “offering memorandum” from the MIC.
  • An offering memorandum is basically a detailed disclosure document. Among other things, it outlines a MIC’s risks, management, terms and objectives.

For residents of AB, MB, SK, QC, PEI and the Territories

  • An “offering memorandum” exemption exists in these provinces as well. It allows individual investors to buy MIC shares if they:
    • Purchase less than $10,000 in a single “trade;” OR,
    • Have net assets (housing assets + non-housing assets – liabilities) over $400,000; OR,
    • The investor’s income is $75,000 in each of the last 3 years, including the current year; OR,
    • The investor’s and spouses income is $125,000 combined on each of the last 3 years, including the current year.

For residents of Ontario

  • No other exemptions exist for the typical individual investor, apart from the accredited investor and minimum investment exemptions described above.

For purchases of publicly traded MICs

  • Anyone in any province can invest in publicly traded MICs.
  • Here’s an article about publicly traded MICs from Canadian Capitalist.


We should remind everyone that this is not investment or legal advice. Nor is it a definitive/exhaustive list of regulations. As a result, investors should consult with a licensed investment advisor before purchasing a MIC or acting on any MIC information online.

Also, as a point of interest, the rules governing purchases of MIC shares are largely based on where the purchaser lives. For example, a British Columbia MIC (with no physical presence in Ontario) that sells shares to an individual investor residing in Ontario, would still need to ensure that investor met Ontario’s accredited investor and/or minimum purchase requirements.

Regulations aside, MICs are a compelling investment class. Just ensure you do lots of due diligence. One of the best checklists for MIC purchases is still this one put out by Wayne Strandlund of Fisgard Capital Corporation.

Sidebar:  We’d like to thank Jeremy Farr for all of his guidance with the above rules. Mr. Farr specializes in securities and technology law and is a prominent expert in the field of Mortgage Investment Companies. He also serves as a Director of Evergreen Mortgage Corp. Contact link

Rob McLister, CMT