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 preferred shares (1 preferred share for every $1 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 preferred share certificate and holds the certificate "in trust" on behalf of the shareholder.
For a typical $25,000 investment, the investor would receive a preferred share certificate in the amount of 25,000 preferred shares with par value of $25,000.
Portfolio Selection and Administration
Once an investor's funds have been deposited into the MIC, the management team at Antrim selects mortgages to purchase with the new funds. 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.
Antrim 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; either once per year or once every three months (quarterly), depending on the MIC. Dividend amounts are determined by a professional accounting firm who audits the mortgage portfolio to determine the appropriate amount of dividends to be paid out per preferred share. Dividends are expressed as a percentage (%) and treated as regular income for income tax reporting.
For example, if the dividend rate for the period was 8% and the investor owned 50,000 preferred shares, he or she would be paid 4000 (8% x 50,000 ) preferred shares.
Dividends may be taken in the form of new shares or Cash. Given par value is maintained at $1, the investor in the above example could choose between 4000 more preferred shares or, $4000 in cash.
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.
Directors / Shareholder Participation
Antrim believes in active shareholder participation whenever possible. To this end, we encourage shareholders to attend the annual general meeting. Furthermore, our office is always open to investors and we encourage anyone with questions to stop by.