Mortgage Broker

MORTGAGEBROKER mbabc.ca fall 2015 | 15 letters to the editor update New MB logo works You can tell the people who created the MB logo about this as it's a pretty funny success story. As you know, I am on the road most of today until late doing appointments. I had some downtime and stopped at Tim Hortons to guzzle some water and sit and get some work done on my computer. I am wearing the black golf shirt with the MB on it. A guy walks up and asks me if I am a mortgage broker. I tell him yes, and he points at the logo on my shirt. Turns out, he is new to Canada with a job at a bank (just started). [He's a] former banker in India with a great credit score overseas, fully documentable income and 20 per cent down, looking to buy a place. I took an application on the spot and the guy happened to have his PR confirmation, job letter, ID and everything in his briefcase (Ha!). I am doing an application for him and it looks good. Never would have happened if I wasn't wearing the MB. Shocking how fast the uptake has been already, as he's only been here two months. Rowan Smith, A.M.P. Senior Mortgage Planner / Partner DLC – City Wide Mortgage Services MIC investor limits We have a small MIC and operate under the exemption, "Friends and Family" form. From our understanding we can grow to a maximum 49 investors under this exemption. We are approved for RRSP and TFSA holdings along with cash contribution accounts. We have a few investors that want to hold both a TFSA and RRSP account or a cash account along with a TFSA. Our question is: will that then count as two individual investors even though it is the same person or entity, or one investor with two separate accounts? What is the rule of 49? Investors or accounts? Conversely, and leading to our confusion, was when we began we needed 20 investors within the first year of operation. We got 20 individual investors each with one account. So if each account is worth one investor then all that would be needed would be seven individuals with three accounts each? To us that flies in the face of the spirit of the rule. en why couldn't each investor hold multiple accounts under one name that reports income under the same? Grant Sahaydak Director Accepted Financial Corporation MBABC Member Reply: We understand your primary question to be whether an individual who invests in a mortgage investment corporation using a TFSA, RRSP and cash (or any combination of these) amounts to one investor or to more than one investor, for purposes of determining whether there are no more than the 49 investors permitted to qualify for the BC Securities Act prospectus and registration exemption. We reviewed National Instrument 45-106 (NI) and spoke with Leslie Rose, legal counsel at the BC Securities Commission (BCSC). Ms. Rose confirmed my understanding that the NI, in calculating the number of investors, focusses on beneficial interests rather than legal interests. Section 2.4 of the NI provides, in part: "In this section, 'private issuer' means an issuer … the securities of which … are beneficially owned by not more than 50 persons … provided that each person is counted as one beneficial owner unless the person is created or used solely to purchase or hold securities of the issuer in which case each beneficial owner or each beneficiary of the person, as the case may be, must be counted as a separate beneficial owner." In your case, the same person would hold the beneficial title to the TFSA, RRSP and the cash funds, so there is only one investor. Ms. Rose confirmed this to be the case. Ms. Rose advised that for the interests to count as a single investor, the beneficial interest cannot be held jointly with anyone else and cannot have been transferred from someone else. We believe that in saying this, she was referring to the latter part of the above quote. Beneficial interest in or ownership of property refers to a legal concept and should not be understood in a casual way. It concerns a person's right to the benefits or advantages of owning property rather than concerning who has legal title (such as registered title) to the property. Most oen the beneficial and legal ownership of specific property is held by the same person, but it need not be. For example, a beneficiary of a trust is entitled to the rights and benefits of owning the trust property, although legal title to the trust property is held by the trustee. is area of securities law can be fairly technical; fine distinctions as to the nature of the investment and how it comes about can lead to very different results. It would not be safe to generalize the answer provided in this email without careful consideration. BCSC was prompt and helpful in their assistance. We would encourage you to contact them should you need further clarification or information as to a specific instance you are considering. As to the balance of your questions, we recommend you consult the BCSC document Private and Early Stage Businesses.We believe it will address most, if not all, of your questions. Again, we encourage you to contact BCSC if you need any further information. Please send letters to the editor to: editor@mbabc.ca letters MBABC MEMBERS' VIEWS

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