How a MIC works?

Purchasing Shares

The process starts when an Investor first deposits funds into the MIC. These funds are then exchanged for shares of the company. Each investor is entitled to an appropriate number of common shares (1 common share for every $10 invested) which entitles the shareholder to his or her share of mortgage income earned by the MIC.

When investing within an RRSP, the investor simply instructs his or her trustee (usually a trust company or other financial institution) to deposit funds on his or her behalf into the MIC. The Trustee receives the common share certificate and holds the certificate “in trust” on behalf of the shareholder.

For a typical $25,000 investment, the investor would receive a common share certificate in the amount of 2,500 common shares with par value of $25,000.

Portfolio Selection and Administration

Once an investor’s funds have been deposited into the MIC, the mortgage administrator for MCOCI selects mortgages to purchase and fund with the new capital. Day to day administration of the portfolio includes: receipt and posting of mortgage payments, funding new mortgages, renewal of existing mortgage loans and maintaining amortization schedules and bank records for the portfolio.

MCOCI also maintains an appropriate amount of cash within the portfolio so that existing investors can make redemptions of their principle amount during the year. The amount of cash on hand varies throughout the year and thus large withdrawals, those over $100,000, may require advanced notice in excess of 90 days.


According to section 130.1 of the Canadian Income Tax Act, a MIC must distribute 100% of its annual net income before taxes to shareholders in the form of a dividend. Dividend payments to investors are made on a regular basis; once per month (monthly).

Dividends are expressed as a percentage (%) and treated as regular interest income for income tax reporting.

For example, if the dividend rate for the period was 9% and the investor owned 5,000 common shares, he or she would be paid $4,500 (9% x $50,000 ) common shares.

Dividends may be taken in the form of new shares or Cash. Given par value is maintained at $10, the investor in the above example could choose between 450 more common shares or $4,500 in cash.

Corporate Audit

At the end of every fiscal year, the MIC is audited by an independent accounting firm. The results of this audit are made available to every investor in the form of audited financial statements. The accounting firm performing the audit attends the annual general meeting of shareholders and will answer any questions an investor may have relating to the audit.