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Tag: Shareholders

Challenges in Starting a MIC: Paying Dividends

One of the biggest challenges in running a MIC is when you first realize that the investors who were once your private lenders are now expecting the equivalent of their monthly interest cheques however in the form of a dividend.  With a mortgage, a private lender is accustomed to receiving a monthly cheque of interest only (usually).  The formula is simple, the private lender is expecting the equivalent of the monthly interest rate applied to the principal outstanding on the loan they funded.  With a MIC however, there is no direct attribution of the investor’s investment, through the purchase of MIC shares, with any of the investments the MIC makes, such as mortgage loans.  Hence your once private lender, now turned investor/subscriber in the MIC, has no way of knowing what they will earn except for the expectations you leave them with.The challenge as a newly started MIC should mean no such expectations at all.  Securities law and regulations require that you provide information only based on actual facts and not on a forward looking basis.

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MICs: The Technical Aspects of a Mortgage Investment Corporation

TYPE OF ENTITY FOR A MORTGAGE INVESTMENT CORPORATIONA Canadian Corporation throughout the taxation year where its business only undertakes to invest its funds, and thereafter qualifies as a MIC, is deemed to be a public corporation under the ITA, and therefore must have its financials audited. Depending on which province your MIC is registered, it will have to comply with securities legislation in that province;Depending on which province your shareholders or investors are, it will have to comply with securities legislation in that province;TYPE OF ACTIVITY & INVESTMENT/ASSET BASEMortgages secured against real estate in CanadaMortgagors can be individuals or corporateMortgagors can be Canadian non-residents

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Professional Corporations: What are they and how are they different from any other corporation?

Prior to the end of 2001, professionals could not incorporate their practices except as allowed by the laws that regulated their specific profession (all compliant professional corporations prior to the enactment of the present governing regime were grandfathered in).  Today, regulated professionals are able to incorporate their practices.  Thanks to Bill 152 – Balanced Budgets for Brighter Futures Act, and Bill 45 – Responsible Choices for Growth and Accountability Act, professionals can capitalize on many of the same tax and non-tax advantages enjoyed by other incorporated self-employed individuals.However, unlike other incorporated self-employed individuals who are unregulated professionals, personal professional liability will not be limited through incorporation.  The shareholders of a professional corporation are restricted to licensed members of the same regulated profession, and depending on the profession, their immediate family members.  For those applicable professions, family members who are not licensed under the same regulated profession are restricted to participating only as non-controlling or non-voting shareholders.  The

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ESTATES & EQUALIZATION: How the Courts can enforce your Family Law rights

Court OrdersThe court has extensive powers to enforce the equalization order, Family Law Act (FLA) section 9. It can order:Money to be paid;Security to be given;Payment to be deferred for, or made in instalments over a period of up to 10 years;Transfer of property in specie; orPartition and sale of property. If deferred or instalment payments are ordered, subsequent variation orders are permitted provided the court is satisfied that there has been a material change in the circumstances of the paying spouse. However, the amount of the equalization payment previously determined cannot be varied, FLA, s. 9(3).

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Magna Intl. Inc. Shareholders Lose Appeal: Proposed Arrangement Satisfied “Fair and Reasonable” Test

The appeal by shareholders, British Columbia Investment Management Corporation and others, from Magna International’s successful application for an order approving a proposed arrangement pursuant to s. 182(5) of the Business Corporations Act has been dismissed. Magna designed, developed and manufactured automotive systems.The opposing shareholders were the only Class A shareholders who opposed approval of the proposed arrangement. Collectively, they owned less than three per cent of all of the Class A Shares.Magna had a dual class share capital structure comprising Class A subordinate voting shares (the “Class A Shares”) and multiple voting Class B shares (the “Class B Shares”). The company’s controlling shareholder, the Stronach Trust, owned, outright and through other corporations, all of the 726,829 outstanding Class B Shares.

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BUSINESS: Sole Proprietorships, Partnerships, Limited Partnerships, Limited Liability Partnerships, Corporations & Joint Ventures

The most basic form of business organization, used in a wide variety of circumstances, is called a sole proprietorship. Such organizations are relatively inexpensive to set up and require few legal formalities. In fact, a sole proprietorship comes into effect when an individual carries on business for his or her own account without the involvement of other individuals, excepting employees. Quite a number of small businesses

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THE SHAREHOLDERS AGREEMENT: The most important agreement of your Company!

First and foremost a contract, a shareholders agreement has all the ingredients thereof, for it to be binding and legal.  There is an offer and acceptance, consideration, capacity, and above all a bona fide legal purpose. They (shareholders agreements) are a class of contracts relating specifically to the relationship between some or all of the shareholders of a corporation and, possibly, between those parties and the

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CORPORATE LAW & THEORY: Examples of Share Classes (Rights & Restrictions) and Corporate Organization

Much too often I receive questions about the rights and restrictions that corporate shares carry with them, and what the concept of having different classes of shares is all about.  Thus, I decided to post up the most common examples of share classes and the way the rights were attributed to each class; so that you, the reader, may comment or ask questions using our commenting section below

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DIRECTOR’S LIABILITY

Having regard to the wide scope of authority exercised by a company’s management (its directors and senior management officers), a broad range of duties and liabilities are  vested on them by the applicable laws. Actually, those onerous responsibilities are a measure of the complete and unquestioned trust, which the company and its owners (the shareholders) repose on such personnel. Quite a few of those

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PROVINCIAL INCORPORATION: Deeper into Federal vs. Provincial

The provincial law in Ontario stipulates that a company doing business in the province should also incorporate there. Meticulously satisfying the incorporating requirements therein, along with advice from lawyers and accountants, the process of forming a company would not be difficult.

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