Working Ventures Canadian Fund Inc.

Headnote

Subsection 74(1) - non-listed issuer exempted from sections 25 and 53 of Act inrespect of options to executives under incentive plan, subject to conditions, includingrequirement for shareholder approval if shares reserved for issuance could result innumber of reserved shares granted to related persons exceeding 18% of outstandingissue or could result in number of reserved shares granted to any one related personand associates exceeding 6% of outstanding issue. Issuer is a labour sponsoredinvestment fund whose shareholders realize on their investment through redemptionrather than trading. Issuer has limited control over the number of shares outstanding.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 35(1)12.iii, 35(1) 19, 53, 72(1)f(iii), 72(1)(n), 74(1).

Rule Cited

Rule 45-503 Trades to Employees, Executives and Consultants.

UPON the application of Working Ventures Canadian Fund Inc. (the "Applicant") tothe Ontario Securities Commission (the "Commission") for a ruling pursuant to subsection74(1) of the Act that certain trades to executives of the Applicant and its affiliates madepursuant to the Applicant's stock option plan made as of September 1, 1998, as amendedfrom time to time, not be subject to section 25 or 53 of the Act;

AND UPON considering the application and the recommendation of staff of theCommission;

AND UPON the Applicant having represented to the Commission as follows:

1. The Applicant was incorporated under the laws of Canada on February 29, 1988.

2. The Applicant is a reporting issuer under the Act and to the best of its knowledge,information and belief, is not in default of any of the requirements under the Act orregulation made thereunder.

3. The Applicant is a labour-sponsored venture capital corporation registered underthe Income Tax Act (Canada) and a labour-sponsored investment fund corporationregistered under the Community Small Business Investment Funds Act (Ontario).

4. The authorized share capital of the Applicant consists of an unlimited number ofClass A shares ("Shares"), 1,000 Class B shares and an unlimited number of ClassC shares issuable in series. As at September 1, 1998, the effective date of thePlan, 51,914,142 Shares and 1,000 Class B shares were issued and outstanding.As at November 2, 1999, 45,005,956 Shares and 1,000 Class B shares were issuedand outstanding.

5. The Shares are not listed for trading on any stock exchange. The Shares areoffered for sale only through registered dealers. The most recent prospectusqualifying the distribution of the Shares is dated December 29, 1999. Immediatelyprior thereto, the Shares were qualified for distribution by a prospectus datedDecember 22, 1998 (the "1998 Prospectus").

6. Holders of Shares may request the Applicant to redeem their Shares withoutrepayment of tax credits on or after the eighth anniversary of the date of issue (orfifth anniversary in the case of Shares issued prior to March 6, 1996) at the netasset value per Share next determined after the redemption request is received bythe Applicant. Shares may also be redeemed prior to the expiry of the eight-yearperiod (or five-year period, as the case may be) upon repayment, in most cases, ofany tax credits received on such Shares and upon payment of applicableredemption fees. In certain circumstances, the Applicant may suspend redemptionsor may be prohibited from making redemptions.

7. In September 1998, the Board of Directors (the "Board") of the Applicant approvedthe Plan, as of September 1, 1998. On November 25, 1998 and April 7, 1999, theBoard approved certain amendments to the Plan.

8. The purpose of the Plan is to provide an incentive and reward for participants in thePlan related to the achievement of long-term financial and strategic objectives ofthe Applicant and to encourage continued employment with the Applicant and itsaffiliates.

9. The Plan provides that the Board may grant options ("Options") to subscribe forShares to directors, officers, employees, former employees and consultants to theApplicant or any affiliate of the Applicant ("Participants").

10. The Plan provides that the number of Shares that may be issued pursuant toOptions shall not exceed 5,000,000 of the issued and outstanding Shares.

11. The Plan provides that Options are non-transferable, other than upon death of theParticipant. Participation in the Plan is voluntary.

12. Prior to establishing the Plan, the Applicant established the Applicant's InvestmentPerformance Incentive Plan and Investment Performance Incentive Plan (1996) (the"IPIP Plans"). The IPIP Plans entitled participants in those plans to receiveincentive compensation based upon the return earned on the Applicant's ventureinvestments.

13. As disclosed in the 1998 Prospectus and in the Applicant's ManagementInformation Circular dated October 15, 1998 (the "1998 Management InformationCircular"), all participants in the IPIP Plans ("IPIP Participants") were offered theopportunity to exchange their rights to receive any future payments under the IPIPPlans for Options under the Plan. No further rights will be granted under the IPIPPlans as it is intended that the Plan will provide incentive compensation on a going-forward basis.

14. In addition to the offers of Options to IPIP Participants, offers of Options were alsomade to senior officers and prospective senior officers of the Applicant or itsaffiliates ("Executives"), in reliance on the registration and prospectus exemptionscontained in paragraph 35(1)19 and clause 72(1)(n) (the "statutory employeeexemptions") in reliance on there being no requirement for shareholder approvalin order to grant Options to Executives on an exempt basis.

15. As of June 1, 1999, IPIP Participants have accepted offers of 2,500,000 Optionsand approximately 600,000 Options have been offered to Executives (includingnewly hired Executives) of the Applicant. The Board has approved the grant ofthese Options.

16. Since December 22, 1998, the effective date of the Rule, whereby the statutoryemployee exemptions were removed and replaced by the provisions of the Rule,requiring shareholder approval for certain issuances in certain situations. Optionswere issued to Executives in November, 1999, subject to regulatory approval.

17. The number of Shares permitted to be issued under and reserved for issuancepursuant to the Plan (the "Reserved Shares") exceeded 10 percent of the issuedand outstanding Shares as at June 1, 1999 as well as at November 2, 1999. Thenumber of Reserved Shares that potentially may be granted to certain individualExecutives over the next three years may exceed 5 percent of the issued andoutstanding Shares.

18. Since the Plan was amended and restated on November 25, 1998, at which timethe number of Reserved Shares was less than 10 percent of the outstandingShares, the number of Reserved Shares has not changed. Due to the redeemablenature of the Applicant's Shares, the Applicant has limited control over redemptionsand any corresponding decline in the total number of outstanding Shares. As aconsequence, the Reserved Shares as a percentage of total outstanding Sharesmay fluctuate above or below 10 percent. Also, as a result, the Reserved Sharesgranted to an individual Executive as a percentage of total outstanding Shares mayfluctuate above or below 5 percent.

19. The Applicant seeks an exemption from the conditions to the registration andprospectus exemptions available in Commission Rule 45-503 Trades to Employees,Executives and Consultants (the "Rule") in respect of trades in securities of anissuer which is not a listed issuer, as defined in the Rule, to executives of theApplicant and its affiliates that require shareholder approval where: (i) the numberof Reserved Shares to related persons could exceed 10 percent of the outstandingissue, as defined in the Rule, of the Applicant; and (ii) the number of ReservedShares to any one related person and the related person's associates could exceedfive percent of the outstanding issue, as defined in the Rule, of the Applicant.Because the Applicant is a pooled investment vehicle whose shares areredeemable at the option of holders and not at the option of the Applicant, theApplicant has limited control over the number of shares outstanding.

20. For the current year and, based on an approximate forecast of the Applicant'soutstanding Class A share capital for the next five years as a result of internalprojections as to Share subscriptions and anticipated redemptions for these years,the Shares reserved for options could result in the Reserved Shares granted torelated persons exceeding 10 percent of the outstanding issue of Shares in eachof those years and could result in the number of Reserved Shares granted to anyone related person and the related person's associates exceeding five percent ofthe outstanding issue of Shares in each of these years.

21. The Applicant does not have any incentive plan, other than the Plan, providing forthe issue of a security of the Applicant as an incentive. Previously, as disclosed inthe 1998 Prospectus and 1998 Management Information Circular, the Applicantpermitted certain senior officers to take their bonus payments or payments underthe IPIP Plans in Shares or options to acquire Shares. However, this privilege isno longer available. No such options remain outstanding.

22. The Applicant relies on subparagraph 35(1)12.iii and subclause 72(1)(f)(iii) of theAct with respect to the issuance of the Shares on exercise of the Options to theExecutives under the Plan.

AND UPON the Commission being satisfied that to do so would not be prejudicialto the public interest;

IT IS RULED pursuant to subsection 74(1) of the Act that trades by the Applicant(or an executive administrator) in options granted under the Plan, to executives of theApplicant or its affiliates (or an executive administrator of the Applicant) not be subject tosection 25 or 53 of the Act, provided that:

A. prior shareholder approval (as defined in the Rule) has been obtained for thePlan if the Plan, as amended, together with all of the Applicant's otherpreviously established or proposed incentives or incentive plan could result,at any time, in

(i) the number of Shares reserved for issuance under stock optionsgranted to related persons exceeding 18 percent of the outstandingissue of the Applicant,

(ii) the issuance to related persons, within a 12 month period, of anumber of Shares exceeding 18 percent of the outstanding issue ofthe Applicant,

(iii) the number of Shares reserved for issuance under stock optionsgranted to any one related person and the related person'sassociates exceeding six percent of the outstanding issue of theApplicant, or

(iv) the issuance to any one related person and the related person'sassociates, within a 12 month period, of a number of Sharesexceeding six percent of the outstanding issue of the Applicant;

the terms "incentive", "incentive plan", "shareholder approval", "outstandingissue" and "related persons" being interpreted as defined under the Rule;and

B. the Applicant complies with clauses (b), (c) and (d) of section 3.2, and Parts 4, 10and 11 of the Rule, as if the Options and Shares acquired under the Plan had beenacquired in reliance on the prospectus exemption contained in section 3.2 of theRule.

February 4^th, 2000.

"Howard I. Wetston"     "R. Stephen Paddon"