Notice and National Policy (effective January 1, 2000): NP - 12-201 - Mutual Reliance Review System for Exemptive Relief Applications Implementation

National Policy

le 19 novembre 1999

NOTICE

NATIONAL POLICY 12-201 MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS

IMPLEMENTATION

SUBSTANCE AND PURPOSE OF THE POLICY

National Policy 12-201 Mutual Reliance Review System for Exemptive Relief Applications(the "policy") is published in this Bulletin.

Canadian securities regulatory authorities (the "CSA") will implement the policy on January1, 2000.

The policy will establish the mutual reliance review system ("MRRS") for exemptive reliefapplications ("ERA").

The policy embodies the principles of mutual reliance set out in the memorandum ofunderstanding (the "MOU") signed as of October 14, 1999 and published on October 29,1999 by the CSA.

BACKGROUND AND TESTING

The policy was initially published for comment as a concept proposal (the "conceptproposal") in January, 1998 with the comment period ending June, 1998.

Testing of ERA commenced in March, 1998 and continues until implementation.

Eight industry comments were received on the concept proposal. The concept proposalwas then redrafted as a national policy, which was published for comment on November20, 1998. The comment period ended February 28, 1999.

The CSA received two comment letters on the draft policy from

Osler Hoskin & Harcourt
Borden & Elliot.

The CSA would like to thank commentators for providing their comments on the policy.The nature of the comments received were very helpful. Copies of the comment lettersmay be viewed at the office of a member of the ERA Committee listed below.

The comments received were supportive of ERA and that support was further evidencedby the increasing number of filers that elected to use ERA during testing.

All Canadian securities regulatory authorities and approximately 32 law firms participatedin testing.

At present about three quarters of all exemptive relief applications are filed under ERA.

There were no material changes made to the policy published for comment. Only draftingand formatting changes meant to clarify the policy were made.

SUMMARY OF COMMENTS RECEIVED

General

Comment:Two commentators suggested that time lines be imposed on the review ofapplications by the staff of the principal regulator under ERA. This comment was alsoraised when the policy was initially published as a concept paper.

Response: The CSA has not made any change to the policy in this regard.

The policy does not set specified time lines for the review of applications by the principalregulator as the time required will vary depending on the type and complexity of eachapplication and the responsiveness of filers to comments. It is the review of the applicationby the principal regulator that other securities regulatory authorities will rely on and thisreview should not be constrained.

Part 4 of the policy "Pre-filing Discussions"

Comment: One commentator

suggested that the filer should be able to elect whether a pre-filing involved noveland substantive issues or raised novel public policy issues
requested that a specified review period be set out for the review of the principalregulator's proposed approach on pre-filings by non-principal regulators.

Response: The CSA feels that the principal regulator, rather than the filer, is the mostappropriate person to determine whether a filing is routine or involves novel andsubstantive issues or raises novel public policy issues. Accordingly no change was madeto the policy.

The CSA agrees with the commentator's suggestion that there should be a time line on thereview by non-principal regulators and the policy now specifies a seven business dayreview period.

Part 5 of the policy "Filing of Materials under MRRS"

Comment:One commentator suggested that ERA should result in reduced fees. Thesuggestion was that fees should be standardized across jurisdictions with possibly a flatprincipal regulator and non-principal regulator fee. This comment was also raised whenthe policy was initially published as a concept paper.

Response:The CSA has noted the comment and, while the CSA is considering the issueof fees generally, the CSA does not feel the issue can be fully addressed in the context ofthe policy.

Comment:One commentator suggested that the failure to file materials in all jurisdictionsconcurrently should not trigger a new review period for non-principal regulators.

Response: No change has been made to the policy. The CSA feels it is the filer'sresponsibility to ensure applications are filed concurrently with all securities regulatoryauthorities so that staff in each jurisdiction have an equal opportunity to conduct their initialreview of the application and provide the principal regulator with any substantive issuesarising from that review. This is not unreasonable given that applications can easilyinitially be filed by facsimile with the hard copy and fees following.

Comment:One commentator requested that notice be given to filers if a principalregulator plans to treat an application as abandoned.

Response: The CSA agrees and this has been added to the policy.

Part 6 of the policy "Review of Materials"

Comment:One commentator suggested that comments from non-principal regulators onapplications should also be forwarded to filers.

Response: The CSA feels this would be inconsistent with the principles of mutualreliance. Filers generally deal only with the principal regulator on applications. Thesuggested approach would undermine this principle. The CSA feels that filers wouldcorrespond directly with non-principal regulators, leaving principal regulators without allof the information necessary to consider an application. Staff of principal regulators areresponsible for reviewing the application and determining what comments will be made onan application. It is unlikely in practice that a principal regulator would not relay asubstantive comment of a non-principal regulator to a filer with the result that a filer wouldbe surprised with an opt out late in the process.

Part 9 of the policy "Opting out of the System"

Comment:One commentator suggested

that the policy should be clear that opting out by a local securities regulatoryauthority does not trigger a requirement for the filer to file a new application andadditional fees with that securities regulatory authority
that the staff of the local securities regulatory authority opting out should preparea draft local decision for the filer to review
that the date of the issue of the local decision by the local securities regulatoryauthority opting out should be no later than the date of the issue of the MRRSdecision document on the application.

Response:The CSA agrees that, in the case of an opting out on an application, a newapplication and an additional fee would not be necessary. The policy has been clarified.

The CSA feels that once there has been an opt out of ERA for an application, ERA can nolonger specify the process for reviewing that application by that securities regulatoryauthority. That local securities regulatory authority's local processes would need to befollowed. The policy has therefore not been changed.

Part 10 of the policy "Effect of Silence"

Comment:Two commentators suggested silence should be deemed to be opting into adecision as opposed to opting out of a decision. It was suggested the current approachmay lead to confusion among participants and potentially lengthen the process. It wassuggested that deeming silence to be an opt into a decision would operate as an incentivefor non-principal regulators to consider applications in a timely manner. This commentwas also raised when the policy was initially published as a concept paper.

Response:The CSA does not agree with the commentators.

The wording of the policy has not been changed. The policy retains the concept thatsilence is a deemed opting out of ERA for a particular application and, given the nature ofthe relief granted, a positive act indicating an exercise of discretion is still felt to be thewisest course.

MRRS decision documents are not standardized like registration certificates or prospectusreceipts. Each decision is quite unique and a positive indication that the decision reflectseach non-principal regulator's decision is felt necessary. More harm could come fromdeeming a securities regulatory authority to have opted in through silence if the securitiesregulatory authority has not actually exercised its discretion to opt in than from deeminga securities regulatory authority to have opted out through silence if the securitiesregulatory authority has actually exercised its discretion to opt in. In the former case thereis a decision made available to the filer that represents a decision not actually made andin the latter the securities regulatory authority could simply issue its own decision toremedy the situation.

Part 11 of the policy "MRRS Decision Document"

Comment:One commentator felt that it should be possible to have a MRRS decisiondocument that had an effective date earlier than the date on which the MRRS decisiondocument was signed.

Response: The CSA has not adopted this comment as securities regulatory authoritiesare generally reluctant to grant retroactive relief out of a concern for intervening rights.

Commentators also made drafting suggestions to clarify the policy some of which wereadopted. There were some drafting and formatting changes made, as a result of testing,to clarify the policy and to ensure consistency with other MRRS instruments. None ofthese were material.

SUMMARY OF THE POLICY

The following is a summary of the policy:

A filer is eligible to elect to use ERA for any application made to more than onesecurities regulatory authority, except for those applications for which the grantingof exemptive relief can be evidenced by a MRRS decision document issued underNational Policy 43-201 Mutual Reliance Review System for Prospectuses andAnnual Information Forms (the "prospectus policy") or by a certificate ofregistration;
The policy provides that a filer electing to use ERA for an application is responsiblefor selecting a principal regulator for the application in accordance with guidelinesset out in the policy. These guidelines mirror similar provisions in the prospectuspolicy and are generally based on the location of the head office of the filer or theconnection of the filer to a jurisdiction. The policy clarifies the procedure forchanging the principal regulator for an application;
The policy provides a process for pre-filing discussions on applications. If theprincipal regulator determines that the pre-filing discussion is of a routine nature,the pre-filing will be dealt with by the principal regulator. If the principal regulatordetermines that the pre-filing discussion involves a novel and substantive issue ora novel public policy issue, the policy provides for a consultative process betweensecurities regulatory authorities. The process is similar to that provided for in theprospectus policy;
The policy provides guidance on the contents of applications and on howapplications should be made by filers electing to use ERA. Applications andapplication filing fees should be filed concurrently in all jurisdictions. The policyprovides that if applications are not filed concurrently in all jurisdictions or areincomplete or deficient, the timing of the review may be affected;
A single application document should be drafted referencing the relevant legislativeprovisions of the principal regulator. The policy contains a provision that theapplication should contain footnotes or be accompanied by a table of concordanceclearly referencing all the relevant legislative provisions of all non-principalregulators where the application is made. The application should also containanalysis of where the provisions of the legislation of the non-principal regulatorsdiffers from that of the principal regulator;
The policy provides that the filer will generally deal only with the staff of theprincipal regulator on an application;
There will be no surrender of the exercise of discretion by any local securitiesregulatory authority under ERA. All securities regulatory authorities will exercisetheir discretion to grant or deny exemptive relief on an application. Non-principalregulators will rely on the review and analysis of the application by the staff of theprincipal regulator;
Under the policy, the staff of non-principal regulators will have seven business daysto notify the staff of the principal regulator of substantive issues on an applicationthat in the view of staff may, if left unresolved, cause the non-principal regulator toopt out of ERA for the application. The staff of the principal regulator can abridgethis time period if they feel the circumstances warrant the abridgement;
Once the staff of the principal regulator has completed their review of an application(having the benefit of the substantive comments of the staff of non-principalregulators), they will notify the staff of the non-principal regulators of theirrecommendation and forward the recommendation to the principal regulator for adecision on the application;
Once the principal regulator has made a decision on an application the staff of theprincipal regulator will forward their staff memorandum and recommendation andthe decision of the principal regulator on the application to the non-principalregulators involved in the application. The staff memorandum must identifysubstantive comments received from the staff of non-principal regulators and theview of the staff of the principal regulator on these comments;
Non-principal regulators have seven business days to decide whether to make thesame decision as the principal regulator on an application or whether to opt out ofERA for the application. The principal regulator cannot abridge this time period butonly request that the non-principal regulators attempt to make their decisions in ashorter period. The policy establishes a procedure to ensure there is nounintended opting out of ERA on an application due to silence. Staff of the principalregulator will send a reminder by facsimile to all non-principal regulators who havenot responded within five business days;
A non-principal regulator may opt out of ERA for an application by advising thefiler, the principal regulator and the other non-principal regulators of its decision toopt out and its reasons for doing so. The non-principal regulator that has opted outwill continue its review of the application, deal directly with the filer, make adecision with respect to the application and issue its own decision document. Anon-principal regulator that has opted out of ERA can opt back into ERA at any timeprior to the end of the opting out period set by the policy;
The policy indicates that silence by a non-principal regulator on an application isdeemed to be an opting out of ERA for an application;
The decision of the principal regulator on an application will not be released to thefiler until the end of the opting out period set by the policy unless all non-principalregulators have communicated their decisions on the application prior to the endof that period;
The policy provides that once a decision has been made by all non-principalregulators, the principal regulator will issue a MRRS decision document evidencingthe decisions of the principal regulator and all non-principal regulators that have notopted out of ERA for the application. The decisions of all securities regulatoryauthorities and the MRRS decision document will have the same effective date andthe same terms and conditions;
The policy provides that if exemptive relief is needed for part of a transaction ormatter the exemptive relief will be granted for the whole transaction or matter anda filer will look to the MRRS decision document for the exemptive relief for thewhole transaction or matter and will not rely upon any statutory exemptions forportions of the transaction or matter;
The policy provides that the MRRS decision document will generally reflect thesecurities legislation and securities directions of the principal regulator on anapplication. This may mean that similar transactions or matters may be subject todifferent terms and conditions, for example different resale restrictions, dependingon who acts as principal regulator on an application;
The Commission des valeurs mobilières du Québec will concurrently issue its owndecision document on an application to filers. No other local securities regulatoryauthority or regulator will issue its own decision document on an application tofilers. The decisions of all securities regulatory authorities will be evidenced by theMRRS decision document;
The time periods under ERA have been set to ensure that all securities regulatoryauthorities have sufficient time to exercise their discretion under ERA

UNPUBLISHED MATERIALS

In implementing the policy, the CSA have not relied on any significant unpublished study,report or other written materials.

ALTERNATIVES CONSIDERED

The CSA did not consider any alternatives to the policy.

ANTICIPATED COSTS AND BENEFITS

The policy will reduce unnecessary duplication in the review of exemptive reliefapplications filed in more than one jurisdiction and is an important step towards increasingefficiency. In the long term use of ERA may lead to increased harmonization ofapproaches taken by securities regulatory authorities on issues and possibly moreharmonization of legislation.

RELATED INSTRUMENTS

The policy, the policy published for comment, the concept proposal, the MOU, theprospectus policy are related.

INFORMATION

For information contact any of the following members of the Committee:

Margaret Sheehy
British Columbia Securities Commission
865 Hornby Street, 2nd Floor
Vancouver, British Columbia V6Z 2H4
Telephone: (604) 899-6650
Fax: (604) 899-6700
e-mail: [email protected]

Brenda Leong
British Columbia Securities Commission
865 Hornby Street, 2nd Floor
Vancouver, British Columbia V6Z 2H4
Telephone: (604) 899-6647
Fax: (604) 899-6700
e-mail: [email protected]

Marsha Manolescu
Alberta Securities Commission
20th Floor, 10025 Jasper Avenue
Edmonton Alberta T5J 3Z5
Telephone: (780) 422-1914
Fax: (780) 422-0777
e-mail: [email protected]

Nadine Casey French
Alberta Securities Commission
4th Floor, 300 5th Avenue SW
Calgary Alberta T2P 3C4
Telephone: (403) 297-3308
Fax: (403) 297-6156
e-mail: [email protected]

Dean Murrison
ERA Committee Chair
Saskatchewan Securities Commission
800, 1920 Broad Street
Regina, Saskatchewan S4P 3V7
Telephone: 306-787-5879
Fax: 306-787-5899
e-mail: [email protected]

Chris Besko
Manitoba Securities Commission
1130 - 405 Broadway
Winnipeg, Manitoba R3C 3L6
Telephone: (204) 945-0605
Fax: (204) 945-0330
e-mail: [email protected]

Margo Paul
Ontario Securities Commission
20 Queen Street West, Suite 800 Box 55
Toronto, Ontario M5H 3S8
Telephone: (416) 593-8136
Fax: (416) 593-8244
e-mail: [email protected]

Sylvie Lalonde
Commission des valeurs mobilières du Québec
Tour de la Bourse
C.P. 246, 22nd Floor
Montréal, Québec H4Z 1G3
Telephone: (514) 940-2199 ext. 4555
Fax: (514) 864-6381
e-mail: [email protected]

Shirley Lee
Nova Scotia Securities Commission
1690 Hollis Street, 2nd Floor
Halifax, Nova Scotia B3J 3J9
Telephone: (902) 424-5441
Fax: (902) 424-4625
e-mail:[email protected]

DATED: November 19, 1999

NATIONAL POLICY 12-201

MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

PART 1 DEFINITIONS AND INTERPRETATION

1.1 Definitions - In this policy

"application" means a request for exemptive relief other than a waiverapplication or pre-filing as defined in the prospectus policy or a request forexemptive relief if a certificate of registration can evidence the granting ofexemptive relief for that request;

"CSA committee" means the Exemptive Relief Applications Committee ofthe Canadian Securities Administrators;

"exemptive relief" means any approval, declaration, determination,exemption, extension, order, ruling, permission, recognition, revocation,waiver or other relief sought under securities legislation or securitiesdirections;

"facsimile" means a facsimile or other form of electronic transmission;

"filer" means

(a) a person or company filing an application, and

(b) an agent of a person or company referred to in paragraph (a);

"local securities directions" means, for the local jurisdiction, theinstruments listed in Appendix A of National Instrument 14-101 Definitionsopposite the name of the local jurisdiction;

"local securities legislation" means, for the local jurisdiction, the statuteand other instruments listed in Appendix B of National Instrument 14-101Definitions opposite the name of the local jurisdiction;

"local securities regulatory authority" means, for the local jurisdiction,the securities commission or similar regulatory authority listed in AppendixC of National Instrument 14-101 Definitions opposite the name of the localjurisdiction;

"materials" means the documents and fees set out in Part 5;

"MRRS MOU" means the Memorandum of Understanding related to themutual reliance review system signed as of October 14, 1999;

"pre-filing" means a consultation with one or more of the securitiesregulatory authorities regarding the interpretation or application of securitieslegislation or securities directions to a particular transaction or matter orproposed transaction or matter that is the subject of, or is referred to in, anapplication, if the consultation is initiated before the filing of the application;

"principal decision documents" means the principal regulator's staffmemorandum, recommendation and proposed MRRS decision document(s)that are circulated to each non-principal regulator with whom an applicationhas been filed under this policy;

"prospectus policy" means National Policy 43-201 - Mutual RelianceReview System for Prospectuses and Annual Information Forms;

"requested regulator" means a participating principal regulator that a filerrequests under section 3.3(1) to act as the principal regulator;

"securities directions" means the instruments listed in Appendix A ofNational Instrument 14-101 Definitions;

"securities legislation" means the statutes and other instruments listed inAppendix B of National Instrument 14 -101 Definitions;

"securities regulatory authorities" means the securities commissions andsimilar regulatory authorities listed in Appendix C of National Instrument 14-101 Definitions;

"system" means the mutual reliance review system described in this policyfor the review of applications;

1.2 Interpretation

Terms defined or interpreted in the MRRS MOU and used in this policy havethe respective meanings given them in the MRRS MOU.

PART 2 OVERVIEW AND APPLICATION

2.1 Overview and Application

(1) This policy describes the application of the mutual reliance concepts set outin the MRRS MOU relating to the filing and review of applications.

(2) A filer may elect to use the system for any application made in more thanone jurisdiction.

(3) Although the filer will generally deal only with the principal regulatorregarding an application filed under the system, the local securitieslegislation and local securities directions in each jurisdiction are applicableto that application. Filers should ensure that the exemptive relief sought isboth appropriate and necessary in each jurisdiction where the application ismade.

(4) Filers should be aware that the terms and conditions of the MRRS decisiondocument will generally reflect the local securities legislation and localsecurities directions of the jurisdiction in which the principal regulator islocated.

(5) Filers are reminded that the primary objective of the system is to reduceunnecessary duplication in the review of applications. The timelines set outin the system are designed to ensure that the principal regulator and thenon-principal regulators have sufficient time to consider the application andexercise their discretion.

PART 3 PRINCIPAL REGULATOR

3.1 Participating Principal Regulators - As of the date of this policy, thesecurities regulatory authorities and regulators of British Columbia, Alberta,Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia and Newfoundlandhave agreed to act as principal regulator for applications filed under thispolicy.

3.2 Determination of Principal Regulator - A filer is responsible for selectinga principal regulator in accordance with the following guidelines whenelecting to use the system for a particular application:

1. the filer should select as its principal regulator the local securitiesregulatory authority or regulator in the jurisdiction where the filer'shead office is located.

2. if the filer does not require exemptive relief in the jurisdiction referredto in paragraph 1 or the local securities regulatory authority orregulator in the jurisdiction referred to in paragraph 1 is not aparticipating principal regulator under the system, the filer shouldselect the participating principal regulator in the jurisdiction with whichthe filer has the next most significant connection to act as theprincipal regulator.

3. if the filer has no significant connection to any jurisdiction, the filermay select any participating principal regulator to act as the principalregulator.

If the filer is a mutual fund, the location of the head office of the manager ofthe mutual fund will be considered to be the location of the head office of themutual fund for the purposes of selecting a principal regulator under section3.2.

Filers are reminded that it is the location of the head office or the significantconnection of the person or company filing an application, not the headoffice location or connection of the agent, that is used to satisfy the criteriafor selecting a principal regulator under section 3.2. For example, theselection of the jurisdiction in which the offices of the law firm filing anapplication on behalf of a client, whose head office is located in anotherjurisdiction, would not satisfy the criteria under section 3.2.

3.3 Change of Principal Regulator - by Filer

(1) A filer may apply for a change of principal regulator for an applicationif:

(a) the filer believes the principal regulator determined inaccordance with section 3.2 is not the appropriate localsecurities regulatory authority to act as principal regulator fora particular application such as where the nature of theexemptive relief sought could result in the selection of morethan one principal regulator in respect of a transaction ormatter; or

(b) the filer withdraws its application in the jurisdiction where theprincipal regulator is located after the principal regulator hascommenced its review of the application because noexemptive relief is required in that jurisdiction, but the filerwishes to remain in the system for the application.

(2) A filer may apply for a change of principal regulator by filing a writtennotice of the request with the principal regulator determined inaccordance with section 3.2 and the requested regulator at least twobusiness days before the filing of the application referred to inparagraph (1)(a) or as soon as practicable after the withdrawalreferred to in paragraph (1)(b). The written notice should address thebasis for the original designation of principal regulator under section3.2 and the reasons for the requested change.

(3) Filers are reminded to include notice of any change of principalregulator together with reasons for the change in the application.

(4) Requests to change a filer's principal regulator under paragraph (1)will not generally be granted unless exceptional circumstances justifythe change.

(5) If staff of both participating principal regulators consent to the changein designated principal regulator under paragraph (1)(a), staff of therequested regulator will notify the filer.

(6) If staff of both participating principal regulators consent to the changein designated principal regulator under paragraph (1)(b), staff of therequested regulator will notify the filer and the non-principalregulators by facsimile of the change and the reasons for the change.

3.4 Change of Principal Regulator - by the Participating PrincipalRegulators

(1) For a particular application filed under the system, staff of theparticipating principal regulators may determine that it would bepreferable for a participating principal regulator other than theprincipal regulator determined in accordance with section 3.2 to actas a filer's principal regulator. This determination will generally onlybe made when changing the principal regulator would result ingreater administrative and regulatory efficiencies in the reviewprocess for the application such as where the nature of the exemptiverelief sought results in the selection of more than one principalregulator in respect of a transaction or matter.

(2) If staff of the participating principal regulators propose to change afiler's principal regulator for a particular application, staff of theredesignated principal regulator will notify the filer and non-principalregulators by facsimile of the change in principal regulator and thereasons for the proposed change in principal regulator.

3.5 Continued Use of Requested Regulator - A filer may continue to selectthe requested principal regulator as its principal regulator for futureapplications filed under the system, if there has been no material change inthe circumstances giving rise to the change in principal regulator. Filers arereminded to reference the change in principal regulator when setting out thebasis for its selection of principal regulator in any future application underthe system.

3.6 Notification to CSA Committee - The participating principal regulatorsinvolved in a proposal to change a filer's principal regulator will advise theCSA committee of all determinations made under section 3.3 or 3.4 and thereasons for the decision.

PART 4 PRE-FILING DISCUSSIONS

4.1 General

(1) The principles of mutual reliance are available to govern the reviewof pre-filings of applications that will be made to a principal regulatorand at least one other non-principal regulator. Filers intending to filean application under the system should use the procedures set out inPart 4 for any pre-filings related to the application.

(2) Filers are reminded to identify the pre-filing as an MRRS filing and filethe pre-filing sufficiently in advance of the filing of the applicationunder the system to avoid any delays in the issuance of the MRRSdecision document.

(3) Filers should also be aware that different review procedures apply tothose pre-filings that are routine and those that raise novel andsubstantive issues or novel public policy issues.

4.2 Procedure for Routine Pre-Filings - Except as provided in section 4.3, apre-filing made under Part 4 should be submitted to the principal regulatorin the form required by the principal regulator and the filer will deal directlywith the principal regulator to resolve the pre-filing. If staff of the principalregulator determines that the pre-filing involves novel and substantive issuesor raises novel public policy issues, staff of the principal regulator will advisethe filer that the pre-filing would be more appropriately dealt with inaccordance with the procedures described in section 4.3.

4.3 Procedure for Novel and Substantive Pre-Filings - If staff of the principalregulator determines that a pre-filing filed under Part 4 involves a novel andsubstantive issue or raises a novel public policy issue

(a) staff of the principal regulator will request that the filer concurrentlysubmit the pre-filing by facsimile to the principal regulator and all non-principal regulators;

(b) staff of the non-principal regulators will have seven business daysfrom receipt of the pre-filing to raise with the principal regulatorsubstantive issues that in the view of staff may, if left unresolved,cause the non-principal regulator to opt out of the system if anapplication related to the pre-filing was filed under the system; and

(c) staff of the principal regulator will notify staff of the non-principalregulators of its proposed approach with respect to the pre-filing andwill give staff of the non-principal regulators seven business days toadvise staff of the principal regulator of their disagreement with theproposed approach with respect to the pre-filing before notifying thefiler of the outcome. Staff of the principal regulator will advise the filerthat the outcome of the pre-filing represents the approach adopted byall non-principal regulators other than those that advised the principalregulator of their disagreement with the approach within that sevenbusiness day period.

4.4 Disclosure in Related Application - In any application filed under thissystem, the filer should describe the subject matter of any pre-filing and theapproach taken on the pre-filing by staff of the principal regulator and, ifapplicable, staff of any non-principal regulator that disagreed with theapproach adopted by the principal regulator and had an alternative approachfor the pre-filing.

PART 5 FILING OF MATERIALS UNDER MRRS

5.1 Election of MRRS and Identification of Principal Regulator - A filerwishing to use the system is responsible for selecting a principal regulatorin accordance with the criteria set out in Part 3 and identifying the non-principal regulators from whom exemptive relief is sought.

5.2 Materials to be Filed

(1) A filer should file concurrently in each jurisdiction where exemptiverelief is sought materials consisting of

(a) a written application drafted in accordance with the proceduresof the principal regulator as to format and content in which thefiler:

(i) states that the application is being filed under thesystem and identifies the jurisdictions in which theapplication is being filed,

(ii) identifies whether a separate application in connectionwith the same transaction or subject matter has beenfiled outside of the system in one or more jurisdictionsand the reasons for filing a separate application,

(iii) identifies the principal regulator(s) selected and thebasis for that selection (i.e. whether in accordance withthe guidelines in section 3.2 or the criteria in section3.3 or 3.4),

(iv) describes any pre-filing discussions under sections 4.2and 4.3;

(v) sets out any request to shorten either the review periodreferred to in section 6.2 or the opting out periodreferred to in section 8.1, or both, together withsupporting reasons;

(vi) sets out under separate headings all of the exemptiverelief sought, including any request for confidentiality,and clearly identifies the jurisdictions in which eachhead of relief is sought and all of the relevantprovisions of the local securities legislation and localsecurities directions of the jurisdiction in which theprincipal regulator and each non-principal regulator islocated, including an analysis where the provisions ofthe local securities legislation or local securitiesdirections of a jurisdiction in which a non-principalregulator is located differs from those of the jurisdictionin which the principal regulator is located. Theseprovisions may be set out in a footnote or table ofconcordance.

(b) supporting materials;

(c) draft form(s) of MRRS decision document(s) with terms andconditions, including resale restrictions, based on the localsecurities legislation and local securities directions of thejurisdiction in which the principal regulator is located; and

(d) the appropriate fees payable in each jurisdiction under securitieslegislation.

(2) By way of example

(a) If in connection with a reorganization, a filer with a head officein jurisdiction A requires exemptive relief from the prospectusand registration requirements in all jurisdictions and wishes tobe designated as a reporting issuer in only three jurisdictions(jurisdictions "A", "B" and "C"), the filer would

(i) select a principal regulator in accordance with section 3.2- in this case the filer selects jurisdiction "A" as theprincipal regulator for each head of relief,

(ii) set out the relief sought under two separate headings - inthis case one for the registration and prospectus reliefand a second for the reporting issuer designation,

(iii) prepare and file with the application one draft MRRSdecision document dealing with the registration andprospectus relief for all jurisdictions and the reportingissuer designation for jurisdictions "A", "B" and "C",

(b) if, however, the filer in this example wishes to be designated asa reporting issuer in only jurisdictions "B" and "C", the filer wouldordinarily file a separate application for each head of relief, butunder the system

(i) the filer would

(A) combine the requests for exemptive relief in oneapplication,

(B) select another principal regulator in accordancewith section 3.2 for the reporting issuerdesignation head of relief as that relief is notrequired in jurisdiction "A", and

(C) prepare and file with the application two draftMRRS decision documents, one dealing with theregistration and prospectus relief for whichjurisdiction "A" is the principal regulator and thesecond dealing with the reporting issuerdesignation for which either jurisdiction "B" or "C"would act as the principal regulator, or

(ii) in exceptional circumstances, the filer could request achange of principal regulator under section 3.3; or

(c) if registration and prospectus relief is required in a number ofjurisdictions for a multi-trade transaction, such as anamalgamation or reorganization, but the trades that require reliefdiffer from jurisdiction to jurisdiction, due to the availability ofstatutory exemptions or blanket relief, the filer would

(i) select a principal regulator in accordance with section3.2,

(ii) in the application

(A) establish that some aspect of the transaction orsubject matter of the application requiresexemptive relief in each jurisdiction,

(B) provide a detailed analysis of the trades and theexemptive relief required in each jurisdictiontogether with supporting arguments, and

(C) identify any statutory exemptions that apply to anyaspect of the transaction or subject matter of theapplication in each jurisdiction, and

(iii) prepare and file with the application one draft MRRSdecision document that provides registration andprospectus relief for the entire transaction or subjectmatter of the application. This will ensure that theexempt transaction or subject matter is treated uniformlyin all jurisdictions named in the MRRS decisiondocument.

(3) Filers are advised to submit their applications sufficiently in advance ofany deadlines to ensure that staff of the principal regulator has areasonable opportunity to complete their review of the application andmake recommendations to the principal regulator and all of the non-principal regulators for a decision on the merits of the application.

(4) Filers must ensure that some aspect of the exemptive relief sought isnecessary in each jurisdiction where the application is made.

(5) Filers are reminded that the Commission des valeurs mobilieres duQuébec ("CVMQ") will require that a French language version of thedraft MRRS decision document be filed in Quebec when the CVMQ isacting as principal regulator.

5.3 Request for Confidentiality

(1) Filers requesting that the application and supporting material be heldin confidence during the application review process must provide asubstantive reason for the request.

(2) If a filer is seeking to have the application and supporting materialsand/or the MRRS decision document held in confidence after theeffective date of the MRRS decision document, the request forconfidentiality should be set out in a separate head of relief with theappropriate fee payable in each jurisdiction where confidentiality issought.

(3) The filer should provide an explanation in the application todemonstrate that the request for confidentiality is reasonable in thecircumstances and is not prejudicial to the public interest.

(4) The filer should also provide a timeline for lifting a grant ofconfidentiality.

5.4 Filing

(1) The filer should file materials with the principal regulator andconcurrently with each non-principal regulator. Applications cannot befiled electronically through SEDAR as the materials filed under thesystem are not a mandated filing under SEDAR.

(2) Filers are encouraged to file the application both by facsimile and inpaper format to ensure the timely delivery of materials to all non-principal regulators. Failure to file the application concurrently in alljurisdictions may affect the timing of the review and the issuance of theMRRS decision document.

5.5 Incomplete or Deficient Material

(1) If the materials filed under the system are deficient or incomplete, staffof the principal regulator may direct that the filer file an amendedapplication with the principal regulator and each non-principalregulator.

(2) Upon confirmation from the filer that an amended application has beenfiled with the principal regulator and all non-principal regulators, theprincipal regulator will provide the filer and the non-principal regulatorswith a new acknowledgment of receipt referred to in section 5.6 whichwill trigger a new seven business day review period referred to insection 6.2.

5.6 Acknowledgment of Receipt of Filing

(1) Upon receipt of an application, the principal regulator will provide byfacsimile an acknowledgment of receipt of the application to the filerand non-principal regulators. In the acknowledgement, the principalregulator will identify the name, phone number, fax number and e-mailaddress of the staff member who has been assigned to review theapplication and the end date of the review period referred to in section6.2.

(2) On receipt of the acknowledgement, each non-principal regulator willnotify the principal regulator by facsimile of the name, phone number,fax number and e-mail address of the staff member assigned to theapplication in that jurisdiction and confirm receipt of the application.

(3) If a non-principal regulator has not received the application at the timethe acknowledgment is received, the filer will be directed by staff of theprincipal regulator to deliver the application to that non-principalregulator. When the principal regulator is satisfied that each non-principal regulator is in receipt of the application, the principal regulatorwill provide the filer and the non-principal regulators with a newacknowledgement of receipt referred to in this section which will triggera new seven business day review period referred to in section 6.2.

5.7 Withdrawal or Abandonment of Application

(1) If an application is withdrawn at any time during the process, the fileris responsible for notifying by facsimile the principal regulator and allnon-principal regulators and providing an explanation for thewithdrawal.

(2) If at any time during the review process staff of the principal regulatordetermine that an application has been abandoned by a filer, staff ofthe principal regulator will notify by facsimile the filer that theapplication will be marked "not proceeded with" and the file closedwithout further notice to the filer unless the filer responds in writingwithin 10 business days with acceptable reasons as to why the fileshould remain open. If no response is received from the filer within the10 business day time period, staff of the principal regulator will notifyby facsimile the filer and all non-principal regulators that the file hasbeen closed.

PART 6 REVIEW OF MATERIALS

6.1 Reliance on Principal Regulator

(1) Staff of the principal regulator is responsible for reviewing anyapplication filed under the system in accordance with its usual reviewprocedures, analysis and precedents together with the benefit ofcomments, if any, from staff of the non-principal regulators.

(2) The filer will generally deal only with staff of the principal regulator, whowill be responsible for issuing comments to and receiving responsesfrom the filer.

(3) In exceptional circumstances, staff of the principal regulator may referthe filer to staff of a non-principal regulator.

6.2 Review Period for Non-Principal Regulators

(1) Staff of the non-principal regulators will have seven business days fromreceipt of the acknowledgment referred to in section 5.6 to review theapplication.

(2) If staff of a non-principal regulator identify substantive issues that in theview of staff may, if left unresolved, cause the non-principal regulatorto opt out of the system for that particular application, staff will forwardthese comments to staff of the principal regulator by facsimile beforethe expiration of the seven business day review period or the abridgedperiod referred to in section 6.3.

(3) If staff of a non-principal regulator are of the view that no relief isrequired under the securities legislation in Canada of that jurisdiction,staff of the non-principal regulator will notify the filer and the principalregulator by facsimile and request that the application be withdrawn inthat jurisdiction.

6.3 Abridgement of Review Period for Non-Principal Regulators

(1) If staff of the principal regulator considers it appropriate, they canabridge the seven business day review period referred to in section 6.2by notifying each of the non-principal regulators by facsimile.

(2) Such abridgements will generally be made only in exceptionalcircumstances.

(3) Filers requesting an abridgement must satisfy the staff of the principalregulator that the application has been concurrently filed in alljurisdictions and that immediate attention to the application isnecessary and reasonable under the circumstances.

(4) If staff of a non-principal regulator are of the view that there isinsufficient time to review the application under the abridged timeperiod, staff of the non-principal regulator will notify the filer and theprincipal regulator by facsimile and request that the application bewithdrawn from the system for that jurisdiction. The application will beprocessed as a local application filed in that jurisdiction.

6.4 Review and Processing of Application by Principal Regulator - Followingthe expiration of the seven business day period referred to in section 6.2 orthe abridged period referred to in section 6.3, staff of the principal regulatorwill

(a) complete their review of the application;

(b) prepare a staff memorandum that

(i) provides an analysis of the application and the exemptiverelief sought,

(ii) identifies a request by the filer for the application and/orthe MRRS decision document to be held in confidencebeyond the effective date of the MRRS decisiondocument, the basis for the request, including atimeframe for lifting of any grant of confidentiality, and

(iii) identifies any substantive issues raised by staff of thenon-principal regulators and the view of staff of theprincipal regulator on such issues;

(c) make a recommendation to grant or deny the exemptive reliefsought by the filer and concurrently notify staff of each non-principal regulator by facsimile of the recommendation; and

(d) if there is a recommendation to grant the exemptive reliefsought, prepare a proposed MRRS decision document followingthe form described in section 11.2. The proposed MRRSdecision document should also reference any request forconfidentiality of materials and/or the MRRS decision documentbeyond the effective date of the MRRS decision document.

PART 7 DECISION OF PRINCIPAL REGULATOR

7.1 Principal Regulator to Grant or Deny Relief - Upon completion of thereview process and after considering the recommendation of its staff, theprincipal regulator will determine whether to grant or deny the exemptive reliefsought.

7.2 Decision to Grant Exemptive Relief

(1) If the principal regulator makes a decision to grant the exemptive reliefsought, the principal regulator will immediately circulate by facsimile theprincipal decision documents to the non-principal regulators.

(2) Two business days before the expiry of the opting out period referredto in section 8.1, the principal regulator will follow-up by facsimile witha reminder to each non-principal regulator that has not provided theconfirmation referred to in section 8.1.

(3) The principal regulator will not communicate the decision to the fileruntil after the opting out period referred to in section 8.1 has elapsedexcept where all non-principal regulators have made their decisionsbefore the expiry of the opting out period, in which case the principalregulator will communicate the decision to the filer as soon as itreceives all of the confirmations referred to in section 8.1.

7.3 Potential Denial of Exemptive Relief - If the principal regulator is notprepared to grant the exemptive relief sought based on the information beforeit, the principal regulator will notify the filer and the non-principal regulatorsby facsimile that it intends to deny the exemptive relief sought.

7.4 Opportunity to be Heard on a Potential Denial

(1) If a filer requests the opportunity to appear and make submissions tothe principal regulator as a result of a potential denial of the exemptiverelief sought, the principal regulator will notify by facsimile the non-principal regulators with whom the application was filed that the filerhas made the request and circulate their staff memorandum andrecommendation.

(2) The principal regulator may hold a hearing, either solely, jointly orconcurrently with other interested non-principal regulators.

(3) The non-principal regulators with whom the application was filed maymake whatever arrangements they consider appropriate, includingconducting a hearing contemporaneously with the hearing held by theprincipal regulator.

(4) After the hearing, the principal regulator will circulate by facsimile theprincipal decision documents to the non-principal regulators.

PART 8 DECISION OF NON-PRINCIPAL REGULATORS

8.1 Decision of Non-Principal Regulator

(1) Each non-principal regulator will have seven business days fromreceipt of the principal decision documents to confirm to the principalregulator by facsimile whether it has made the same decision as theprincipal regulator or is opting out of the system for that application.

(2) If staff of the principal regulator considers it appropriate, staff may onlyrequest, but cannot require, that the non-principal regulators abridgethe seven business day time period if possible. Filers requesting anabridgement will be asked to satisfy staff of the principal regulator thatthe abridgement is necessary and reasonable in the circumstances.

(3) Each non-principal regulator may document for its own purposes thedecision made on each application in its jurisdiction in accordance withits own procedures.

PART 9 OPTING OUT OF THE System

9.1 Opting Out of the System

(1) A non-principal regulator electing to opt out of the system on anyparticular application will notify the filer, the principal regulator andother non-principal regulators by facsimile and briefly indicate reasonsfor opting out.

(2) In opting out of the system for a particular application, a non-principalregulator is not making a decision on the merits of the application.

(3) A filer is entitled to deal directly with a non-principal regulator that hasopted out of the system to resolve outstanding issues and obtain adecision in respect of that particular application without having to filea new application or remit a new application fee. If the filer and non-principal regulator are able to resolve all outstanding issues, the non-principal regulator may opt back into the system for that application bynotifying the principal regulator and all other non-principal regulatorsby facsimile within the opting out period referred to in section 8.1.

(4) Reasons for opting out will be forwarded by the non-principal regulatorto the CSA committee.

PART 10 EFFECT OF SILENCE

10.1 Effect of Silence - Silence on the part of a non-principal regulator at the endof the opting out period referred to in section 8.1 will mean that the non-principal regulator is considered to have opted out of the system for thatparticular application.

PART 11 MRRS DECISION DOCUMENT

11.1 Effect of MRRS Decision Document

(1) The MRRS decision document evidences that a decision has beenmade by the principal regulator and each of the non-principalregulators that has not opted out of the system for the application.

(2) The MRRS decision document will generally reflect the local securitieslegislation and local securities directions of the jurisdiction in which theprincipal regulator is located. This may mean that similar transactionsor matters may be subject to different terms and conditions, for exampleresale restrictions, depending on who acts as the principal regulator foran application.

(3) The MRRS decision document provides exemptive relief for the entiretransaction or matter that is the subject of the application. This ensuresthat the exempt transaction or matter is treated in a uniform manner inall jurisdictions named in the MRRS decision document. Consequently,if the transaction or matter is a composite transaction or mattercomprised of a series of trades, the filer will look to the MRRS decisiondocument for all trades in the series and not rely on statutoryexemptions for some trades and on the MRRS decision document forother trades.

11.2 Form of MRRS Decision Document

(1) Except as described below, the MRRS decision document will be in theform of the MRRS decision document attached as Schedule A. Thiswill not preclude the issuance of a less formal MRRS DecisionDocument where it is the current practice. If the decision is a denial ofthe relief sought, the MRRS decision document will set out reasons forthe decision.

(2) If the MRRS decision document is in a form other than the form set outin Schedule A, the MRRS decision document should contain wordingto the effect that the MRRS decision document evidences the decisionsof each relevant local securities regulatory authority or regulator, as thecase may be, and that the decision sets out the decisions of suchsecurities regulatory authorities or regulators, as the case may be.

11.3 Issuance of MRRS Decision Document

(1) The principal regulator will not issue a MRRS decision document withrespect to an application until the earlier of

(a) the date that the principal regulator has received all of theconfirmations referred to in section 8.1; or

(b) the date the opting out period referred to in section 8.1 hasexpired.

(2) After the opting-out period has elapsed, or such earlier date as theprincipal regulator has received all of the confirmations referred toabove, the principal regulator will issue a MRRS decision documentevidencing that a decision to grant or deny the exemptive relief soughthas been made by the principal regulator and each non-principalregulator that has not opted out of the system for that application.

(3) If the MRRS decision document evidences a denial of the exemptiverelief sought, reasons for the denial will be provided in the MRRSdecision document.

(4) The principal regulator will then send the MRRS decision document byfacsimile to the filer and non-principal regulators.

11.4 Effective Date of MRRS Decision Document - The decisions made by eachof the principal regulator and the non-principal regulators with respect to anapplication will have the same effective date as the MRRS decision document.

11.5 Local Decision - Notwithstanding the issuance of the MRRS decisiondocument, the CVMQ will concurrently issue its own local decision in eachcase. The CVMQ local decision will have the same terms and conditions asthe MRRS decision document. No other local securities regulatory authorityor regulator will issue a local decision.

SCHEDULE A

IN THE MATTER OF
THE SECURITIES LEGISLATION
OF (list by name those jurisdictions where the application was filed that have notopted out of the system for this application)

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF ________________(name(s) of filer/relevant parties)

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") ineach of _____________(list by name the jurisdictions where the application was filedthat have not opted out of the system for this application)(the "Jurisdictions") hasreceived an application from __________________ (Name(s) of filer(s) and relevantparties) ( "Definitions as required", collectively the "Filer") for a decision under the securitieslegislation of the Jurisdictions (the "Legislation") that the requirement contained in theLegislation to ___________________(Describe in words - do not use statutoryreferences) shall not apply to _________________ (State who or if a transaction isinvolved briefly describe the transaction in question - do not break down into parts -do not use statutory references - include appropriate defined term);

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the _______________(Name of the principal regulator) is theprincipal regulator for this application;

AND WHEREAS the Filer has represented to the Decision Makers that:

(Insert numbered representations disclosing all facts relevant to the grantingof the relief, including the location of the head office of the Filer. Do not usestatutory references.)

AND WHEREAS under the System, this MRRS Decision Document evidences the decisionof each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdiction to make the Decision hasbeen met;

The Decision of the Decision Makers under the Legislation is that the requirement containedin the Legislation to ___________________________ (Describe in words - do not usestatutory references) shall not apply to ______________________ (State who or, ifapplicable, the transaction using the appropriate definition) provided that:

(Insert numbered terms and conditions. These should be generic and withoutstatutory references to the Legislation of the Jurisdictions where thisapplication was filed and have not opted out of the System for this application)

DATED ______________, 199____.

______________(Name)

______________(Title)