Notice of Proposed Policy, Rescission of NP1 and Proposed National Policy: NP - 43-201 - Mutual Reliance Review System for Prospectus and Annual Information Forms

 

NOTICE OF PROPOSED NATIONAL POLICY 43-201
MUTUAL RELIANCE REVIEW SYSTEM FOR PROSPECTUS
AND INITIAL AIFS

SUBSTANCE AND PURPOSE OF THE PROPOSED NATIONAL POLICY

The proposed National Policy establishes a mutual reliance review system for prospectuses (including mutual fund prospectuses ), prospectus amendments,waiver applications, pre-filing discussions and initial AIFs for issuers eligible to participate in the prompt offering qualification system. The proposed NationalPolicy is derived in part from the Expedited Review System for Short Form Prospectuses and Renewal AIFs implemented by each Canadian securities regulatoryauthority by memorandum of understanding ("Expedited Review MOU").

The Mutual Reliance Review System (the "MRRS") is an understanding between the Canadian securities regulatory authorities on the principles of mutualreliance and is being implemented by way of a memorandum of understanding (the "MOU"). The draft MOU is also being published for comment.

Since the procedures in the proposed National Policy apply to the filing and review of short form prospectuses, the Expedited Review MOU will be replaced bythe proposed National Policy. The Expedited Review MOU also includes procedures for the review of renewal AIFs. The Canadian securities regulatoryauthorities have concluded that renewal AIFs are considered to be continuous disclosure documents and should therefore be included in a MRRS instrumentdealing with continuous disclosure documents when such instrument is developed. Consequently, Expedited Review will no longer be available for renewal AIFs.

For prospectuses and initial AIFs, the MRRS replaces the procedures for filing and review of documents described in National Policy Statement No. 1 ("NP 1").It is proposed that NP 1 be repealed once the MRRS is in effect. The MRRS also replaces those sections in proposed National Instrument 44-101 andCompanion Policy 44-101CP that deal with the procedures for filing and review of short form prospectuses and initial AIFs.

The CSA has authorized the use of the system on a test basis and will in the near future solicit volunteers to participate in the testing phase.

SUMMARY OF PROPOSED NATIONAL POLICY

The following is a brief summary of the MRRS principles as they apply to the filing and review of prospectuses (including mutual fund prospectuses), prospectusamendments, waiver applications, pre-filing discussions and initial AIFs for issuers eligible to participate in the prompt offering qualification system.

• The principal regulator of a filer is the regulator in the jurisdiction in which the head office of the filer is located. If the head office is located in a jurisdiction inwhich the regulator is not willing to act as principal regulator, the filer can select its principal regulator provided the filer has reasonable connections with thejurisdiction in which the regulator is located. For mutual funds, the principal regulator is the regulator in the jurisdiction in which the manager's head office islocated or if that regulator has not agreed to act as principal regulator, the filer can select its principal regulator provided the filer has reasonable connectionswith the jurisdiction in which the regulator is located. A non-principal regulator will decline to act as principal regulator if it has been incorrectly identified bythe filer as the principal regulator.

The proposed National Policy does not provide for a list of filers and their principal regulators similar to the one in Schedule A to the Expedited Review MOU.For those filers who have requested and were granted a change of principal regulator under the Expedited Review MOU, the principal regulator will be theregulator assigned to that filer following the application for change. For those filers whose head office is located in a jurisdiction in which the regulator is notwilling to act as principal regulator, the filer may continue to use the principal regulator attributed to the filer under the Expedited Review MOU. Filers shouldnote in their cover letter whether they have requested a change under the Expedited Review MOU.

• The principal regulator is responsible for reviewing the filer's materials; therefore, even if the filer does not propose to offer securities by way of prospectus inthe jurisdiction of the principal regulator, the materials should also be filed with the principal regulator and the materials will be reviewed by the principalregulator.

The materials to be filed are as currently listed in the table of documents forming part of NP 1 with necessary changes arising out of the filing of documentsthrough SEDAR and, in certain circumstances, changes in Canadian securities legislation and administrative practices. An appendix listing the materials to befiled will be published for comment in the near future.

• The periods for the review by the principal regulator and the non-principal regulators are consistent with those in the Expedited Review MOU and in NPS 1except where the review periods have been reduced because of selective review procedures.
• A non-principal regulator is entitled to opt out of the MRRS for any particular filing by advising the filer, the principal regulator and the other non-principalregulators of its decision to opt out and its reasons for doing so. The non-principal regulator that has opted out of the MRRS will continue its review of thematerials, deal directly with the filer, make a determination with respect to the filing and where appropriate, issue its own decision document. Thenon-principal regulator that has opted out of the MRRS can opt back in the MRRS at any time prior to the issuance of the MRRS decision document.
• The MRRS will not be available if the principal regulator refuses to issue a receipt or a notice of acceptance for the AIF. A filer can pursue its right of appealagainst all jurisdictions.
• Waiver applications and pre-filing discussions

The proposed National Policy contains procedures that apply to applications for relief that are evidenced by the issue of the receipt ("waiver applications"). Allother applications for relief will be filed under the applications policy.

The proposed National Policy provides for a consultative process where the principal regulator determines that waiver applications or pre-filing discussionsinvolve a novel and substantive issue or raise a novel public policy issue. Where the principal regulator determines that waiver applications or pre-filingdiscussions are routine (as determined by the regulators), these will be dealt with by the principal regulator.

• Prospectus amendments

For preliminary prospectus amendments, the principal regulator will issue a preliminary prospectus amendment MRRS decision document. The principalregulator will review the amendment and issue its comment letter within 5 working days (2 working days in the case of a short form prospectus) of thepreliminary prospectus amendment MRRS decision document if the prospectus comment letter has been issued or within the prospectus review period if theprospectus comment letter has not been issued.

The non-principal regulators will advise of material concerns within the later of 3 working days (1 working day in the case of a short form prospectus) of receiptof the prospectus amendment or the expiry of the prospectus review period for the non-principal regulators.

For an amendment to a final prospectus, the review period is 5 working days for the principal regulator and 3 working days from the receipt of the prospectusamendment for the non-principal regulator (2 working days and 1 working day, respectively, in the case of a short form prospectus).

For the reasons set out below, a filer should include in the cover letter accompanying the amendment materials statements that it waives its right to a decisionwithin two days and that it undertakes to cease distributing securities in Québec until the prospectus amendment MRRS decision document is issued.

UNPUBLISHED MATERIALS

In proposing the National 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 proposed National Policy.

ANTICIPATED COSTS AND BENEFITS

The proposed National Policy will reduce unnecessary duplication in the review of materials filed in multiple jurisdictions and is an important step towardsincreasing harmonization.

RELATED INSTRUMENTS

The proposed National Policy, the Concept Release for a National Application System and MOU are related.

Specific Request for Comments

In addition to welcoming submissions on any provision in the proposed National Policy, the CSA seek comments on the specific matters referred to below.

1. Prospectus Amendments

The Securities Act (Québec) requires the Commission des valeurs mobilières du Québec to issue or to refuse to issue the receipt for an amendment to a finalprospectus within 2 working days of the filing of the amendment. A 2-day review period, especially where an amendment presents complex issues, may not besufficient to review and clear the amendment in a mutual reliance environment given the communication procedures between the regulators. To address thisissue, the policy currently states that the filer should include with its materials a waiver of its right to a decision within the 2-day period and an undertaking tocease distribution in Québec. Comments are specifically requested on this approach and any other alternative approaches.

2. Pre-filing Discussions and Waiver Applications

Comments are also specifically sought on the procedures for the review and determination of pre-filing discussions and waiver applications set out in Part 9 ofthe proposed National Policy.

COMMENTS

Interested parties are invited to make written submissions with respect to the proposed National Policy. Submissions received by September 19, 1998 will beconsidered.

Submissions should be made to all of the Canadian Securities Administrators listed below in care of the Commission des valeurs mobilières du Québec induplicate, as indicated below:

 

A diskette containing the submission (in DOS or Windows format, preferably Word) should also be submitted to the Chair of the Committee.

Comment letters submitted in response to requests for comments are placed on the public file in certain jurisdictions and form part of the public record, unlessconfidentiality is requested. Comment letters will be circulated amongst the securities regulatory authorities, whether or not confidentiality is requested. Althoughcomment letters requesting confidentiality will not be placed on the public file, freedom of information legislation in certain jurisdictions may require thesecurities regulatory authorities in those jurisdictions to make comment letters available. Persons submitting comment letters should therefore be aware that thepress and members of the public may be able to obtain access to any comment letters.

Questions and/or requests to participate in the testing of the system may be referred to the Chair and/or any of the following members of the Committee:

 

RESCISSION OF NATIONAL POLICY STATEMENT NO. 1

NP 1 is replaced by the MRRS. The text of the proposed rescission is:

"National Policy Statement No. 1 Clearance of National Issues is rescinded effective upon the date National Policy 43-201 Mutual Reliance Review System forProspectuses and Initial AIFs comes into force."

DATED: June 19, 1998

NATIONAL POLICY 43- 201

MUTUAL RELIANCE REVIEW SYSTEM FOR PROSPECTUSES AND INITIAL AIFS

TABLE OF CONTENTS

PART TITLE

PART 1 OVERVIEW AND APPLICATION

PART 2 DEFINITIONS AND INTERPRETATION

2.1 Definitions

PART 3 PRINCIPAL REGULATOR

3.1 Participating Principal Regulators

3.2 Determination Of Principal Regulator

3.3 Change of Principal Regulator

PART 4 FILING MATERIALS UNDER THE MRRS

4.1 Materials

4.2 Election of MRRS and Identifying Principal Regulator

4.3 Filing

4.4 Black-lined Document

PART 5 REVIEW OF MATERIALS

5.1 Review by Principal Regulator

5.2 Selective Review

5.3 Review Period for Long Form Prospectuses and Initial AIFs

5.4 Review Period for Short Form Prospectuses

5.5 Form of Response

PART 6 OPTING OUT

PART 7 MRRS DECISION DOCUMENT

7.1 Effect of MRRS Decision Document

7.2 Conditions to Issuance of Preliminary MRRS Decision Document

7.3 Form of Preliminary MRRS Decision Document

7.4 Conditions to Issuance of Final MRRS Decision Document for Long Form Prospectus and Initial AIF

7.5 Conditions to Issuance of Final MRRS Decision Document for Short Form Prospectus

7.6 Form of Final MRRS Decision Document

7.7 Local Decision Document

7.8 Late Material Issues

7.9 Refusal by Principal Regulator to Issue Receipt or Notice of Acceptance

7.10 Right to be Heard Following a Refusal

PART 8 APPLICATIONS

8.1 Guidelines for Filing of Applications

PART 9 PRE-FILINGS AND WAIVER APPLICATIONS

9.1 General

9.2 Procedure for Routine Pre-Filings and Waiver Applications

9.3 Procedure for Novel and Substantive Pre-Filings and Waiver Applications

9.4 Filing of Related Materials

9.5 Effect of Related MRRS Decision Document

PART 10 AMENDMENTS

10.1 Filing of Amendments

10.2 Conditions to Issuance of MRRS Decision Document for Preliminary Prospectus Amendments

10.3 Form of MRRS Decision Document for Preliminary Prospectus Amendments

10.4 Review of Preliminary Prospectus Amendments

10.5 Review of Prospectus Amendments

10.6 Conditions to Issuance of Prospectus Amendment MRRS Decision Document

10.7 Form of Prospectus Amendment MRRS Decision Document

10.8 Other Requirements

NATIONAL POLICY 43- 201

MUTUAL RELIANCE REVIEW SYSTEM FOR PROSPECTUSES AND INITIAL AIFS

PART 1 OVERVIEW AND APPLICATION

This Policy describes the practical application of mutual reliance concepts set out in the mutual reliance review system (the "MRRS") Memorandum ofUnderstanding dated *, relating to the filing and review of prospectuses, including mutual fund prospectuses, amendments to prospectuses, initial annualinformation forms and related materials.

Under the MRRS, a designated Canadian securities regulatory authority or regulator as defined in National Instrument 14-101, as applicable, acts as the principalregulator for all materials relating to a filer. This will enable participating principal regulators to develop greater familiarity with their respective filers, which willenhance the efficiency and quality of their review of materials filed under the MRRS.

Although the filer will generally deal only with its principal regulator in connection with materials filed under the MRRS, the Canadian securities legislation andCanadian securities directions of each jurisdiction in which the materials are filed are applicable to the materials.

PART 2 DEFINITIONS AND INTERPRETATION

2.1 Definitions

"amendment" means an amendment to a preliminary prospectus or prospectus;

"application" means a request for discretionary relief from or approval under Canadian securities legislation or Canadian securities directions, but does notinclude a waiver application or pre-filing, as defined;

"applications policy" means National Policy 12-201, or any successor instrument⁽¹⁾;

"CSA committee" means the Corporate Finance Committee of the Canadian Securities Administrators ;

"initial AIF" means an annual information form filed by a filer in order to participate in the prompt offering prospectus system in accordance with therequirements of National Policy Statement No. 47 or any successor instrument and the Securities Act (Québec) and Regulation concerning securities;

"materials" means the documents and fees to be sent by a filer under each category of filing referred to in Appendix "A"⁽²⁾;

"MRRS MOU" means the Memorandum of Understanding relating to the Mutual Reliance Review System dated *;

"NPS 39" means National Policy Statement No. 39, or any successor instrument;

"NPS 47" means National Policy Statement No. 47, or any successor instrument;

"pre-filing" means a consultation with a Canadian securities regulatory authority regarding the interpretation or application of Canadian securities legislation orCanadian securities directions to a particular transaction or proposed transaction that is the subject of, or is referred to in, materials, where the consultation isinitiated before the filing of preliminary or pro forma materials;

"preliminary prospectus amendment" means an amendment to a preliminary prospectus;

"preliminary prospectus amendment MRRS decision document" means a MRRS decision document issued for a preliminary prospectus amendment;

"prospectus amendment" means an amendment to a prospectus;

"prospectus amendment MRRS decision document" means a MRRS decision document issued for a prospectus amendment;

"requested regulator" means a participating principal regulator, other than the principal regulator determined in accordance with section 3.2, which a filerrequests under subsection 3.3(1) to act as its principal regulator;

"SEDAR" means the system for electronic document analysis and retrieval as set out in National Instrument 13-101, or any successor instrument;

"waiver application" means a request for discretionary relief from Canadian securities legislation or Canadian securities directions, if the relief, if granted, isevidenced by the issuance of a MRRS decision document under this Policy;

PART 3 PRINCIPAL REGULATOR

3.1 Participating Principal Regulators

As of the date of this Policy, the Canadian securities regulatory authorities of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec and NovaScotia have agreed to act as principal regulator for materials filed under this Policy.

3.2 Determination Of Principal Regulator

It is the responsibility of the filer to determine its principal regulator. Unless changed or redesignated under section 3.3, the principal regulator for a filer isdetermined in accordance with the criteria set out below.

(1) For filers other than mutual funds whose head office is in a jurisdiction in which a participating principal regulator is located, the principal regulator is theCanadian securities regulatory authority in the jurisdiction in which the head office is located.

(2) For filers other than mutual funds whose head office is not in a jurisdiction in which a participating principal regulator is located, the filer can select aparticipating principal regulator as its principal regulator, provided that the filer has a reasonable connection with the jurisidiction in which the selected principalregulator is located.

(3) For filers that are mutual funds whose manager's head office is in a jurisdiction in which a participating principal regulator is located, the principal regulator isthe Canadian securities regulatory authority in the jurisdiction in which the manager's head office is located.

(4) For filers that are mutual funds whose manager's head office is not in a jurisdiction in which a participating principal regulator is located, the filer can select aparticipating principal regulator as its principal regulator, provided the filer has a reasonable connection with the jurisdiction in which the selected principalregulator is located.

For a particular filing of Materials, if the filer has incorrectly identified a non-principal regulator as the principal regulator, such non-principal regulator willdecline to act as principal regulator.

The principal regulator determined in accordance with this section is the principal regulator for all materials subsequently filed under this Policy unless thecircumstances relevant to the determination of the principal regulator have changed or the principal regulator has been changed in accordance with section 3.3.

3.3 Change of Principal Regulator

(1) Application to Change made by Filer

A filer may apply for a change of principal regulator if it believes that its principal regulator is not the appropriate Canadian securities regulatory authority to actas principal regulator. Applications to change a filer's principal regulator will generally be granted only if it is significantly more administratively efficient for therequested regulator to act as principal regulator. The factors to be considered in assessing an application for a change of a filer's principal regulator include

(a) location of management,

(b) location of assets and operations, and

(c) location of filer's Canadian trading markets or quotation system, or, if the filer's securities are not traded or quoted on a Canadian trading market or quotationsystem, location of filer's security holders.

If a filer applies for a change of its principal regulator, the application should be submitted in writing to the principal regulator and the requested regulator at least20 working days in advance of any filing of materials under this Policy to permit adequate time for staff of the relevant Canadian securities regulatory authoritiesto consider and resolve the application. If the application is not resolved before the date of any filing of materials, the principal regulator will act as principalregulator for that filing, and the change requested, if granted, will relate to materials filed after the issuance of the relevant MRRS decision document.

The application should address the basis for the designation of the filer's principal regulator in accordance with section 3.2, and should set forth the reasons thatit would be significantly more administratively efficient for the requested regulator to act as principal regulator with regard to the factors specified in thissubsection and any other relevant factors. The filer will be given an opportunity to respond to concerns or comments raised by the relevant Canadian securitiesregulatory authorities.

(2) Proposal to Change By the Participating Principal Regulators

The participating principal regulators may determine that it would be preferable for a participating principal regulator other than the principal regulator to act as afiler's principal regulator. This determination will generally only be made if changing the principal regulator of a filer would result in greater administrative andregulatory efficiencies with regard to the factors specified in subsection 3.3(1) and other relevant factors. The participating principal regulators will notredesignate a filer's principal regulator after materials have been filed and before a final MRRS decision document has been issued for the materials.

If the participating principal regulators propose to change a filer's principal regulator, the principal regulator will notify the filer in writing of the proposedredesignation, and will identify the reasons for the proposed redesignation. The redesignated principal regulator will become the filer's principal regulator 20working days after the date of the notice unless the filer objects in writing to the proposed redesignation. The filer, the principal regulator and the proposedredesignated principal regulator will attempt to resolve any objections raised by the filer to the proposed redesignation.

(3) Effect of Change of Principal Regulator

A change of principal regulator under section 3.3 applies to all materials subsequently filed under this Policy unless the principal regulator is changed again inaccordance with section 3.3.

(4) Notification to CSA Committee

The participating principal regulators involved in an application or proposal to change a filer's principal regulator will advise the CSA committee of all decisionsrendered under subsections 3.3(1) or (2) and the reasons for such decisions.

PART 4 FILING MATERIALS UNDER THE MRRS

4.1 Materials

Appendix "A" to this Policy indicates the materials to be filed with the principal regulator and non-principal regulators in connection with each category of filinglisted in the tables.

4.2 Election of MRRS and Identifying Principal Regulator

The filer should indicate in the "Cover Page" of the SEDAR filing that it is electing to file materials under the MRRS. The filer should also indicate in the "CoverPage" of the SEDAR filing its principal regulator and the basis for determining the principal regulator.⁽³⁾ Where a filer's principal regulator is determined inaccordance with subsections 3.2(2) or 3.2(4), the filer should provide a description of the factors connecting the filer to the jurisdiction in which the principalregulator it has selected is located. Where applicable, the filer should provide the date of a decision under section 3.3 changing or redesignating the principalregulator.

4.3 Filing

Except where specifically exempted by SEDAR, materials are filed through SEDAR with the principal regulator and each relevant non-principal regulator.

Where a filer proposes to make a prospectus distribution of securities only in jurisdictions other than the jurisdiction in which its principal regulator is located,the materials, including the required fees, should also be filed with the principal regulator, and will be reviewed by the principal regulator. This will enableparticipating principal regulators to maintain familiarity with their respective filers.

4.4 Black-lined Document

Except in the case of short form prospectuses, a filer should file through SEDAR a draft prospectus or draft initial AIF, black lined to show changes other thanpricing information, as far as possible in advance of filing final materials. A French language translation of the black lined prospectus should be filed in Québec.This black lined version is in addition to the black lined version of the final prospectus or initial AIF to be filed with the final materials.

PART 5 REVIEW OF MATERIALS

5.1 Review by Principal Regulator

The principal regulator is responsible for reviewing all materials in accordance with the Canadian securities legislation and Canadian securities directions of thejurisdiction in which the principal regulator is located, and in accordance with its review procedures, analysis and precedents. The principal regulator will beresponsible for issuing and resolving comments on materials and issuing the final MRRS decision document once the conditions set out in sections 7.4 or 7.5, asapplicable, have been satisfied. While the non-principal regulators may review the materials and will advise the principal regulator of any material issues relatingto the materials that, if left unresolved, would cause the non-principal regulators to opt out of the MRRS, the filer will generally deal solely with the principalregulator.

5.2 Selective Review

As of the effective date of this Policy, the Canadian securities regulatory authorities of Ontario, British Columbia and Alberta have adopted a system of selectivereview of offering documents and initial AIFs.

5.3 Review Period for Long Form Prospectuses and Initial AIFs

A principal regulator that has implemented a system of selective review of offering documents and initial AIFs will, within three working days of the date of thepreliminary MRRS decision document or receipt of the pro forma materials, notify the non-principal regulators of the designated level of review to be given tothe materials, i.e. full review, issue-oriented review or basic review.

If either

(a) a principal regulator that has implemented a system of selective review of offering documents and initial AIFs selects materials relating to a preliminary longform prospectus or initial AIF for either full review or issue-oriented review, or

(b) a principal regulator does not have a system of selective review of offering documents and initial AIFs,

the principal regulator will use its best efforts to review the materials and issue a comment letter within 10 working days of the date of the preliminary MRRSdecision document or receipt of the pro forma materials. The non-principal regulators will, within 5 working days of the date of receipt of the comment letter ofthe principal regulator, use their best efforts to

(a) advise the principal regulator, in accordance with section 5.1, of any material concerns with the materials that, if left unresolved, would cause thenon-principal regulator to opt out of the MRRS, or

(b) indicate in the SEDAR Status Screen that they are clear to receive final materials, if there are no outstanding applications or waiver applications that havebeen filed with the non-principal regulators.

For materials relating to a preliminary long form prospectus or initial AIF that has been selected for basic review, the non-principal regulators will, within 7 daysof being notified that the materials have been selected for basic review, use their best efforts to comply with (a) and (b) above.

5.4 Review Period for Short Form Prospectuses

The principal regulator will use its best efforts to review materials relating to a preliminary short form prospectus and issue a comment letter within 3 workingdays of the date of the preliminary MRRS decision document. Each non-principal regulator will, by 12:00 noon, Eastern time, on the day following the date ofissuance of the comment letter of the principal regulator, use its best efforts to

(a) advise the principal regulator, in accordance with section 5.1, of any material concerns with the materials that, if left unresolved, would cause thenon-principal regulator to opt out of the MRRS, or

(b) indicate in the SEDAR Status Screen that they are clear to receive final materials, if there are no outstanding applications that have been filed with thenon-principal regulators.

Despite the foregoing, if, in the opinion of the principal regulator, a proposed offering by way of short form prospectus is too complex to be reviewed adequatelywithin the prescribed time periods, the principal regulator may determine that the time periods applicable to long form prospectuses should apply, and theprincipal regulator will, within one day of the filing of the preliminary short form prospectus, use its best efforts to so notify the filer and the non-principalregulators. The filer is encouraged to submit a pre-filing to resolve any issues that may cause a delay in the prescribed time periods.

5.5 Form of Response

The filer should provide to the principal regulator written responses to the comment letter issued by the principal regulator.

PART 6 OPTING OUT

A non-principal regulator can opt out of the MRRS for a filing at any time before the issuance by the principal regulator of the final MRRS decision documentfor the materials. The non-principal regulator will provide notice of its decision to opt out to the filer, the principal regulator and the other non-principalregulators by indicating in the SEDAR Status Screen that it is "Not Clear for Final". The non-principal regulator will at that time provide written reasons for itsdecision to opt out of the MRRS to the filer. The non-principal regulator that has opted out will also advise the principal regulator and the other non-principalregulators of its reasons for opting out. In that event, the filer will deal directly with the non-principal regulator that has opted out to resolve any outstandingissues.

If the filer and the non-principal regulator are able to resolve their outstanding issues before the issuance of the final MRRS decision document, the non-principalregulator may opt back in to the MRRS by notifying the principal regulator, all other non-principal regulators and the filer by indicating in the SEDAR StatusScreen that it is "Clear for Final".

Reasons for opting out will be forwarded to the CSA committee.

PART 7 MRRS DECISION DOCUMENT

7.1 Effect of MRRS Decision Document

The MRRS decision document confirms that a determination on materials has been made by the principal regulator and the non-principal regulators that have notopted out of the MRRS for the materials.

7.2 Conditions to Issuance of Preliminary MRRS Decision Document

A preliminary MRRS decision document will be issued by the principal regulator if

(1) the principal regulator has determined that acceptable materials have been filed,

(2) the filer has confirmed to the principal regulator in a letter accompanying the materials that materials have been filed with all non-principal regulators thathave not opted out of the MRRS for the materials, and

(3) the filer has confirmed to the principal regulator that, to the best of its knowledge, the filer is not in default of any requirements of the Canadian securitieslegislation of each jurisdiction in which the materials are filed and is not subject to a cease trade order issued by a Canadian securities regulatory authority in ajurisdiction in which the materials are filed.

7.3 Form of Preliminary MRRS Decision Document

The preliminary MRRS decision document for a preliminary prospectus will contain the following legend:

This preliminary mutual reliance review system decision document confirms that preliminary receipts of (name each jurisdiction in which preliminarymaterials were filed) have been issued.

7.4 Conditions to Issuance of Final MRRS Decision Document for Long Form Prospectus and Initial AIF

A final MRRS decision document for a long-form prospectus or an initial AIF will be issued by the principal regulator if

(1) the statutory waiting period, where applicable, has expired,

(2) all non-principal regulators have indicated in the SEDAR Status Screen that they are "Clear for Final" or have opted out of the MRRS for the filing,

(3) the principal regulator has determined that acceptable materials have been filed,

(4) the filer has confirmed to the principal regulator in a letter accompanying the materials that materials have been filed with all non-principal regulators thathave not opted out of the MRRS for the materials,

(5) the filer has confirmed to the principal regulator that, to the best of its knowledge, the filer is not in default of any requirements of the Canadian securitieslegislation of each jurisdiction in which the materials are filed and is not subject to a cease trade order issued by a Canadian securities regulatory authority in ajurisdiction in which the materials are filed, and

(6) the filer has confirmed to the principal regulator in a letter accompanying the materials that all necessary relief from applicable Canadian securities legislationor Canadian securities directions has been applied for and granted by the principal regulator and non-principal regulators.

7.5 Conditions to Issuance of Final MRRS Decision Document for Short Form Prospectus

A final MRRS decision document for a short-form prospectus will be issued by the principal regulator if the conditions specified in section 7.4, other thansubsection 7.4(1), have been met and at least two working days from the date of the preliminary MRRS decision document have elapsed.

7.6 Form of Final MRRS Decision Document

The final MRRS decision document for a final prospectus will contain the following legend:

This final mutual reliance review system decision document confirms that final receipts of (name each jurisdiction in which final materials were filed) havebeen issued.

The final MRRS decision document for an initial AIF will contain the following legend:

This final mutual reliance review system decision document confirms that notices of acceptance of (name each jurisdiction in which materials were filed) havebeen issued.

7.7 Local Decision Document

Despite the issuance of the MRRS decision document, certain non-principal regulators will issue concurrently their own decision documents for materials. In thecase of materials filed for a proposed distribution of securities, it is not necessary for a filer to obtain a copy of the local decision document before commencingthe distribution of its securities.

7.8 Late Material Issues

If material issues are raised after each of the non-principal regulators have indicated that they are clear for final, the principal regulator may determine that it isnot prepared to issue a final MRRS decision document unless each of the non-principal regulators provides reconfirmation that it is clear for final materials. Theprincipal regulator will submit through SEDAR under "Other Correspondence" with the description "Reconfirmation Requested from Non-Principal Regulators"a letter identifying the new material issue and requesting that each non-principal regulator reconfirm in the SEDAR Status Screen that it is "Clear for Final". Thefiler should ensure that the non-principal regulators respond to the correspondence of the principal regulator. A non-principal regulator that does not providereconfirmation is considered to have opted out of MRRS.

7.9 Refusal by Principal Regulator to Issue Receipt or Notice of Acceptance

If the principal regulator refuses to issue a receipt or notice of acceptance, as the case may be, for materials and therefore refuses to issue a MRRS decisiondocument, it will notify the filer and the non-principal regulators by sending a refusal letter through SEDAR, and the MRRS will no longer apply to the filing. Inthese circumstances, the filer will deal separately with the Canadian securities regulatory authority in each jurisdiction in which the materials were filed, includingthe principal regulator, to determine if those jurisdictions will issue a local decision document. Filers are cautioned that, once the MRRS is no longer applicableto the materials, each non-principal regulator may conduct its own comprehensive review of the materials.

To the extent the issues that gave rise to the refusal to issue a MRRS decision document are resolved to the satisfaction of all parties, the filer may request thatthe MRRS apply once again to the materials.

7.10 Right to be Heard Following a Refusal

If a filer requests a hearing for a refusal by the principal regulator to issue a receipt, the principal regulator will promptly advise the non-principal regulators ofthe request. The principal regulator will generally hold the hearing, either solely or together with other interested non-principal regulators. The non-principalregulators may make whatever arrangements they consider appropriate, including conducting hearings.

PART 8 APPLICATIONS

8.1 Guidelines for Filing of Applications

In many instances, certain discretionary relief is required by a filer to enable a filing of materials or to facilitate a distribution of securities under materials filed.The following guidelines may assist a filer in ensuring that the review of materials is not unduly delayed if there is a concurrent application.

(1) The principles of mutual reliance are available to govern the review and disposition of applications that are made in multiple jurisdictions. If the application isto be filed under the MRRS, it should be filed under the applications policy.

(2) If the relief requested in the application is a condition to the issuance of a MRRS decision document and if the application is not filed in a timely manner, theissuance of the MRRS decision document may be delayed. In this regard, if an application is filed under the MRRS, filers are referred to the time periods forprocessing applications as contained in the applications policy.

(3) Filers are reminded that, as at the date of this Policy and except as provided below, if an application requests relief that is reasonably required to facilitate thedistribution of securities to which a prospectus filed through SEDAR relates, the application may be filed through SEDAR or in paper form. National Instrument13-101 provides that applications made under NPS 39 shall be filed through SEDAR. Any application made under NPS 39 or any application that is permitted orrequired to be made through SEDAR shall be filed under a separate SEDAR Project Number.

(4) If an application is filed separately from the materials to which the application relates, the filer should select in page 2 of the "Cover Page" of the SEDARproject for the related filing of materials under the field "Application for Exemption Order in", those jurisdictions in which the application is being made. The filershould also indicate in a cover letter accompanying the application that there is a related filing of materials that has either been filed or will be filed.

PART 9 PRE-FILINGS AND WAIVER APPLICATIONS

9.1 General

The principles of mutual reliance are available to govern the review of pre-filings and waiver applications that are made to the principal regulator and at least oneother non-principal regulator. If a pre-filing or waiver application is made to one or more non-principal regulators and not to the principal regulator, the filershould submit the pre-filing or waiver application separately to each relevant non-principal regulator and will deal separately with each non-principal regulator toresolve the pre-filing or waiver application. In addition, in a letter accompanying materials filed, the filer should describe the subject matter of any pre-filings orwaiver applications made to the non-principal regulators and the disposition thereof by the non-principal regulators.

If the resolution of a pre-filing or waiver application is a condition precedent to the issuance of either a preliminary or final MRRS decision document, filers arereminded to file the pre-filing or waiver application sufficiently in advance of the filing of the related materials to avoid any delay in the issuance of the MRRSdecision document.

Different review procedures apply to those pre-filings and waiver applications filed under the MRRS that are routine and those that raise novel and substantiveissues.

9.2 Procedure for Routine Pre-Filings and Waiver Applications

Except as provided in section 9.3, a pre-filing or waiver application made under the MRRS should be submitted to the principal regulator in the form required bythe principal regulator, and the filer will deal directly with the principal regulator to resolve the pre-filing or waiver application. As noted below, the principalregulator may determine that the pre-filing or waiver application involves novel and substantive issues or raises novel public policy concerns and should moreappropriately be dealt with in accordance with the procedures described in section 9.3.

9.3 Procedure for Novel and Substantive Pre-Filings and Waiver Applications

If the principal regulator determines that a pre-filing or waiver application filed under the MRRS involves a novel and substantive issue or raises a novel publicpolicy issue

(a) the principal regulator shall direct the filer to submit the pre-filing or waiver application in written form to the principal regulator and the non-principalregulators,

(b) the non-principal regulators shall be given 5 working days from the date of their receipt of the pre-filing or waiver application to forward to the principalregulator any comments or concerns on the pre-filing or waiver application, and

(c) the principal regulator will notify all non-principal regulators of its proposed disposition of the pre-filing or waiver application and will give the non-principalregulators a reasonable period of time to advise the principal regulator of their disagreement with the proposed disposition of the pre-filing or waiver applicationbefore notifying the filer of the disposition. The principal regulator will advise the filer that the disposition of the pre-filing or waiver application represents thedisposition by all non-principal regulators other than those that advised the principal regulator of their disagreement with the disposition within the specifiedperiod of time.

To accelerate the resolution of a pre-filing or waiver application that contains a novel and substantive issue or raises a novel public policy issue, the filer isencouraged to send the pre-filing or waiver application in written form to the non-principal regulators contemporaneously with submitting it to the principalregulator.

9.4 Filing of Related Materials

For any materials filed under the MRRS to which a pre-filing or waiver application relates, the filer should include in the cover letter accompanying the materialsa description of the subject matter of the pre-filing or waiver application and the disposition of the pre-filing or waiver application by the principal regulator and,if applicable, any non-principal regulator that disagreed with the disposition by the principal regulator and had an alternative disposition of the pre-filing orwaiver application. In the case of a waiver application, the filer should identify the other non-principal regulators from which the requested relief is also needed.

9.5 Effect of Related MRRS Decision Document

In the case of a waiver application, the filer should include in the cover letter referred to in section 9.4 a request that the non-principal regulators grant thediscretionary relief requested from the principal regulator. The MRRS decision document will then confirm that the principal regulator and the non-principalregulators, other than those non-principal regulators that advised the principal regulator of their disagreement with the proposed disposition of the waiverapplication by the principal regulator, have granted the discretionary relief requested in the waiver application. The Canadian securities regulatory authorities ofcertain jurisdictions will also issue their own local decision documents.

PART 10 AMENDMENTS

10.1 Filing of Amendments

Amendment materials should be filed with the principal regulator and the non-principal regulators in accordance with Part 4 of this Policy.

The Securities Act (Québec) provides that the Commission des valeurs mobilières du Québec must issue a receipt for a prospectus amendment, other than aprospectus relating to a continuous distribution, within two working days of receipt of the prospectus amendment. If a filer wishes to apply the MRRS to aprospectus amendment, other than a prospectus amendment relating to a continuous distribution, which is also filed in the province of Québec, it should includein the cover letter accompanying the prospectus amendment materials statements that

(a) it acknowledges that the Commission des valeurs mobilières du Québec may be unable to issue a receipt within two working days of the date of receipt of theprospectus amendment and specifically waives any rights it may have to have a receipt issued by the Commission des valeurs mobilières du Québec within suchtime frame, and

(b) it undertakes that it will cease the distribution of its securities until the prospectus amendment MRRS decision document is issued.

If the filer does not include the foregoing statements in the cover letter accompanying the prospectus amendment materials, the MRRS will not apply to thatfiling.

10.2 Conditions to Issuance of MRRS Decision Document for Preliminary Prospectus Amendments

A preliminary prospectus amendment MRRS decision document will be issued by the principal regulator if

(1) the principal regulator has determined that the required materials have been filed,

(2) the filer has confirmed to the principal regulator in a letter accompanying the materials that materials have been filed with all relevant non-principal regulators,and

(3) the filer has confirmed to the principal regulator that, to the best of its knowledge, the filer is not in default of any requirements of the Canadian securitieslegislation of each jurisdiction in which the materials are filed and is not subject to a cease trade order issued by the Canadian securities regulatory authority in ajurisdiction in which the materials are filed.

10.3 Form of MRRS Decision Document for Preliminary Prospectus Amendments

The Canadian securities legislation and Canadian securities directions in force in certain jurisdictions require that a receipt be issued for a preliminary prospectusamendment. The Canadian securities legislation and Canadian securities directions in force in other jurisdictions do not require that a receipt be issued, and it hasbeen the administrative practice of those jurisdictions to issue a notice of acceptance of filing for the preliminary prospectus amendment. For the purposes of thisPolicy, a preliminary prospectus amendment MRRS decision document shall constitute confirmation that, if applicable, the required receipts or notices ofacceptance of filing have been issued by the principal regulator and the non-principal regulators.

The preliminary prospectus amendment MRRS decision document will contain the following legend:

This mutual reliance review system decision document confirms that receipts or notices of acceptance of filing of (name each jurisdiction in which amendmentmaterials were filed) have been issued.

10.4 Review of Preliminary Prospectus Amendments

(1) If a preliminary prospectus amendment is filed before the issuance by the principal regulator of its comment letter relating to the preliminary prospectusmaterials, the principal regulator may be unable to complete its review of the preliminary materials and issue its comment letter within the time periods indicatedin sections 5.3 and 5.4, as applicable.

(2) If a preliminary prospectus amendment in respect of a preliminary long form prospectus is filed after the principal regulator has issued its comment letter

(a) the principal regulator will use its best efforts to review the materials and issue a comment letter within 5 working days of the date of the preliminaryprospectus amendment MRRS decision document, and

(b) the non-principal regulators will use their best efforts to advise the principal regulator of any material issues relating to the materials that, if left unresolved,would cause the non-principal regulator to opt out of the MRRS within the later of

(i) 3 working days of the date of the preliminary prospectus amendment MRRS decision document, and

(ii) the expiry of the time period indicated in section 5.3 for review by the non-principal regulator of the preliminary materials.

(3) If a preliminary prospectus amendment for a preliminary short form prospectus is filed after the principal regulator has issued its comment letter

(a) the principal regulator will use its best efforts to review the materials and issue a comment letter within 2 working days of the date of the preliminaryprospectus amendment MRRS decision document, and

(b) the non-principal regulators will use their best efforts to advise the principal regulator of any material issues relating to the materials that, if left unresolved,would cause the non-principal regulator to opt out of the MRRS within the later of

(i) 1 working day of the date of the preliminary prospectus amendment MRRS decision document, and

(ii) the expiry of the time period indicated in section 5.4 for review by the non-principal regulator of the preliminary materials.

(4) The foregoing time periods may not apply in certain circumstances if it would be more appropriate for the principal regulator and the non-principal regulatorsto review the amendment materials at a different stage of the review process. For example, the principal regulator and the non-principal regulators may wish todefer review of the amendment materials until after receiving and reviewing the filer's responses to comments already issued in respect of the preliminarymaterials.

10.5 Review of Prospectus Amendments⁽⁴⁾

(1) If a prospectus amendment to a long form prospectus is filed, the principal regulator will use its best efforts to review the materials and to issue a commentletter within 5 working days of the date of the receipt of the prospectus amendment, and the non-principal regulators will use their best efforts to advise theprincipal regulator of any material issues relating to the materials that, if left unresolved, would cause the non-principal regulator to opt out of the MRRS within3 working days of the date of the receipt of the prospectus amendment.

(2) If a prospectus amendment to a short form prospectus is filed, the principal regulator will use its best efforts to review the materials and to issue a commentletter within 2 working days of the date of the receipt of the prospectus amendment, and the non-principal regulators will use their best efforts to advise theprincipal regulator of any material issues relating to the materials that, if left unresolved, would cause the non-principal regulator to opt out of the MRRS within1 working day of the date of the receipt of the prospectus amendment.

10.6 Conditions to Issuance of Prospectus Amendment MRRS Decision Document

A prospectus amendment MRRS decision document will be issued by the principal regulator where

(a) all comments raised have been resolved to the satisfaction of the principal regulator and, if applicable, any non-principal regulator that has not opted out ofthe MRRS for the materials,

(b) the principal regulator has determined that acceptable materials have been filed,

(c) the filer has confirmed to the principal regulator in a letter accompanying the materials that materials have been filed with all non-principal regulators thathave not opted out of the MRRS for the materials,

(d) the filer has confirmed to the principal regulator that, to the best of its knowledge, the filer is not in default of any requirements of the Canadian securitieslegislation of each jurisdiction in which the materials are filed and is not subject to a cease trade order issued by a Canadian securities regulatory authority in ajurisdiction in which the materials are filed, and

(e) the filer has confirmed to the principal regulator in a letter accompanying the materials that all necessary relief from applicable Canadian securities legislationor Canadian securities directions has been applied for and granted by the principal regulator and non-principal regulators.

10.7 Form of Prospectus Amendment MRRS Decision Document

The Canadian securities legislation and Canadian securities directions in force in different jurisdictions impose different requirements on receipting or acceptingprospectus amendments. The Canadian securities legislation and Canadian securities directions in force in certain jurisdictions require that a receipt be issued forany prospectus amendment, whereas the Canadian securities legislation and Canadian securities directions in force in other jurisdictions do not require that areceipt be issued, and it has been the administrative practice of those jurisdictions to issue a notice of acceptance of filing for the prospectus amendment. TheCanadian securities legislation and Canadian securities directions of other jurisdictions require that a receipt be issued for a prospectus amendment only wherethe prospectus amendment is filed for the purpose of distributing securities in addition to the securities previously disclosed in the related prospectus. For thepurposes of this Policy, a prospectus amendment MRRS decision document will constitute confirmation that, if applicable, the required receipts or notices ofacceptance of filing have been issued by the principal regulator and the non-principal regulators.

The prospectus amendment MRRS decision document will contain the following legend:

This mutual reliance review system decision document confirms that receipts or notices of acceptance of filing of (name each jurisdiction in which materialswere filed) have been issued.

10.8 Other Requirements

Filers are reminded that the Canadian securities legislation and Canadian securities directions in force in certain jurisdictions require that where a final prospectusamendment has been filed for the purposes of distributing securities in addition to the securities previously disclosed in the prospectus, the additional distributionshall not be proceeded with for a specified period of time.

Filers are also reminded that the Canadian securities legislation and Canadian securities directions of certain jurisdictions provide that, except in certaincircumstances with the written permission of a designated person, a distribution or additional distribution must not proceed until a receipt for a prospectusamendment is issued.

Footnotes

National Policy 12-201 has not yet been published for comment. The mutual reliance review system applicable to applications which will be implemented byNational Policy 12-201 is generally reflected in the Concept Proposal published as CSA Request for Comments 12-401 in January 1998.

The Appendix will include the documents listed in the tables of documents currently forming part of National Policy Statement No. 1, with necessary changesarising out of the filing of documents through SEDAR, and, in certain circumstances, changes to Canadian securities legislation or administrative practice.

Changes to the SEDAR software will be necessary in order for filers to be able to provide the information requested in the SEDAR Cover Page. Pending suchchanges, filers should provide the information in an accompanying cover letter to the filing.

It is the administrative practice of certain jurisdictions to issue a notice of filing when a Prospectus Amendment is filed and before it is reviewed. This policy doesnot adopt this practice, as it is the view of the Committee that filing through SEDAR provides sufficient evidence of filing.