ONTARIO SECURITIES COMMISSION
STAFF NOTICE 61-701
APPLICATIONS FOR EXEMPTIVE RELIEF UNDER RULE 61-501

Introduction

On May 1, 2000, Ontario Securities Commission Rule 61-501 - Insider Bids, Issuer Bids, Going Private Transactions and Related Party Transactions ("Rule 61-501") and Companion Policy 61-501CP (the "Companion Policy") came into effect. Section 9.1 of Rule 61-501 provides that the Director may grant an exemption from Rule 61-501, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

The purpose of this notice is to describe: (i) the process applicable to such applications for discretionary relief; (ii) the types of supporting documentation to be provided to the Director by or on behalf of persons or companies seeking discretionary relief; and (iii) the type of decision document that will be provided when the Director grants an exemption from one or more of the requirements of Rule 61-501.

Rule 61-501 replaced Ontario Securities Commission Policy 9.1 ("Policy 9.1"). The principal differences between the process that previously applied to requests for "no-action" relief under Policy 9.1 and the process that will apply to requests for exemptions from Rule 61-501 are as follows:

(1) Since Rule 61-501 is part of "Ontario securities law", section 9.1 contemplates that, in the appropriate circumstances, the Director will grant a formal exemption from one or more requirements of Rule 61-501. This replaces the practice of issuing "staff no-action letters" under Policy 9.1.

(2) Persons seeking EXEMPTIVE relief under Rule 61-501 are being asked to submit with their application a draft decision document (see Appendix A to this Notice for a sample form of decision document). This is consistent with the practice applicable to applications to the Commission for EXEMPTIVE relief.

(3) If the Director decides to grant an exemption from all or any part of Rule 61-501, the decision will be placed on the public file and published in the Ontario Securities Commission Bulletin. Staff believes that publishing these decisions will enhance the transparency of the decision-making process.

Submission of Applications

1. will be discussed in more detail below, an application package (collectively, the "Application") for relief from one or more requirements of Rule 61-501 should consist of:

(a) a letter or memorandum prepared by or on behalf of the applicant outlining the basis upon which EXEMPTIVE relief is being sought (the "Submission");

(b) a draft decision document, in the form set out in Appendix A to this Notice, providing for the requested relief (please provide a diskette containing the decision document, as well as a paper copy);

(c) supporting documents, as appropriate (e.g., disclosure documents (or excerpts thereof) provided, or to be provided, to securityholders, agreements relating to the transaction in question, financial information, etc.);

(d) a statement: (i) from the person submitting the Application certifying the truth of the facts set out in the Application; and (ii) if the Application is being made by an agent of the applicant on its behalf, a statement from the applicant confirming the agent's authority to prepare and file the Application and confirming the truth of the representations contained in the Application; and

(e) a cheque in the amount of the appropriate fees for the Application and payable to the Ontario Securities Commission.

2. Please send the original, executed Application and two copies of each of items 1(a)-(d) above, together with the cheque referred to in item 1(e), to:

3. If the supporting documents appended to the Submission are bulky, one copy of the supporting documents will be sufficient, unless staff of the Commission requests additional copies. Staff may request that the applicant provide additional copies of the Application in certain circumstances.

4. It is highly recommended that the Submission and draft decision document be faxed directly to the attention of the Director, Take-over/Issuer Bids, Mergers & Acquisitions, as soon as these documents are finalized, so that staff of the Commission can start reviewing these materials immediately, pending receipt of a "hard copy" of the Application and the filing fee. Presently, the take-over bid team's fax number is (416) 593-8177. (Please refer to a current OSC telephone directory, however, to ensure that an up-to-date fax number for the take-over bid team is used.) Please do not fax the supporting documentation unless requested to do so by staff of the Commission.

Confidentiality

5. Upon receipt by staff of an Application for exemptive relief from one or more requirements of Rule 61-501, one copy of the Application will be placed immediately on the public file, unless confidentiality is specifically requested. If confidentiality is requested, the applicant should be prepared to demonstrate that such confidentiality is reasonable in the circumstances and would not be contrary to the public interest.

6. Applicants should be aware that requests for confidentiality will not necessarily be granted and the onus is on the applicant to overturn the presumption favouring public availability of applications. Staff will scrutinize carefully requests for confidentiality, particularly in the context of contentious transactions. An applicant whose request for confidentiality is opposed by staff has the option of withdrawing the Application or requesting a meeting with the Director, Take-over/Issuer Bids, Mergers & Acquisitions, to discuss the confidentiality request.

7. If the Director makes a decision exempting a person or company from one or more provisions of Rule 61-501, the decision will be placed on the public file and published in the Ontario Securities Commission Bulletin. In certain circumstances upon further request by the applicant, the Director will refrain from placing the decision on the public file for a temporary period (e.g., pending an imminent public announcement of the transaction in respect of which exemptive relief has been obtained).

8. Applicants should be aware that freedom of information legislation may require the Commission to provide the press and members of the public with access to applications for exemptive relief and/or exemption decisions, notwithstanding the applicant's request for confidential treatment of such materials.

Content and Format of Applications

9. While the content and form of Applications is not prescribed, staff generally will find it helpful to its analysis of the Application if the Submission:

(a) states whether similar relief has been, or is likely to be requested, with respect to Policy Q-27 (or any successor instrument) issued by the Commission des valeurs mobilières du Québec;

(b) contains a detailed description of the transaction in respect of which relief is being sought;

(c) describes, in general terms, the nature of any other discretionary exemptive relief the applicant is seeking, or expects to seek, from any requirements of applicable Ontario securities law or the securities legislation in other provinces or territories of Canada, in connection with the transaction(s) giving rise to the Application for exemptive relief under Rule 61-501;

(d) describes any pre-filing discussions relating to the relief referred to in paragraphs (a)-(c) above and identifies the staff member(s) with whom such discussions were held;

(e) identifies any automatic exemptions from any of the requirements of Rule 61-501 that the applicant intends to rely upon in connection with the proposed transaction(s);

(f) describes exactly how Rule 61-501 and the Companion Policy would apply to the transaction in the absence of any discretionary exemptive relief;

(g) describes the review and approval process adopted, or to be employed, by the board(s) of directors and the independent committee(s), if any, of the parties to the transaction in respect of which the Application is being made;

(h) explains why exemptive relief is being sought from all or part of Rule 61-501, provides submissions in support of the requested relief and discusses applicable case law, prior Commission decisions and policies;

(i) includes as exhibits the relevant case law and Commission decisions referred to in (h) above;

(j) explains why it would not be contrary to the public interest for the Director to grant the requested relief;

(k) if confidential treatment of all or part of the Application has been requested, explains why confidential treatment is reasonable in the circumstances and not contrary to the public interest; and

(l) if expedited treatment of the Application has been requested, explains why such treatment is required in the circumstances, indicates exactly when relief is needed and explains why it was not possible to apply for relief sooner.

10. Applicants may obtain additional guidance as to the preferred content and format of applications for exemptive relief by referring to Section D of OSC Policy 2.1 - Applications to the Ontario Securities Commission ("Policy 2.1") and any successor thereto.

11. Rule 61-501 provides in many circumstances that the availability of exemptive relief is conditional upon disclosure of the facts supporting reliance upon the exemption in a material change report and/or a disclosure document provided to securityholders in connection with the proposed transaction. (See, e.g., sections 2.4, 3.4, 4.5 and 5.6 of Rule 61-501.) If draft or final versions of such documents are available at the time the Application is filed, please provide such documents (or the relevant excerpts if the documents are lengthy) as part of the supporting documentation for the Application.

Procedure for Processing Applications

12. Upon receipt of an Application, a Commission staff member will be assigned to review the Application and recommend disposition. The staff member may contact the applicant if further information or clarification is required. If the additional information or clarification sought is not provided within a reasonable amount of time, the Director may decide that the Application should be treated as abandoned.

13. If the staff member recommends that the requested exemption be granted and the Director accepts such recommendation, the Director will issue a written decision granting the requested exemption upon such terms and conditions as the Director believes it is appropriate to impose.

14. Decisions by the Director, either to grant the requested exemption or deny the requested exemption (including a denial of the requested exemption unless the applicant consents to having the Application placed on the public file or disclosed to persons or companies who may be affected by the Application), are subject to review by the Commission in accordance with subsections 8(2) and (3) of the Act. Subsection 8(2) of the Act provides that any person or company directly affected by a decision of the Director may, by notice in writing sent by registered mail to the Commission within thirty days after the mailing of the notice of the decision, request and be entitled to a hearing and review thereof by the Commission. Subsection 8(3) provides that, upon such a hearing and review, the Commission may confirm the decision under review or make such other decision as the Commission considers proper.

15. An Application may be withdrawn at any time before the Director has reached a decision on the matter without prejudice to the applicant's right to re-apply.

For further information, please contact:

UPON the application (the "Application") of ______________ [name(s) of applicant(s) - use defined terms, as appropriate] to the Director for a decision pursuant to section 9.1 of Rule 61-501 that, in connection with ______________ [brief description of the transaction in respect of which exemptive relief is requested - use defined terms, as appropriate], __________ [name(s) of applicant(s)] be exempt from section(s) _____ [list the provisions of Rule 61-501 in respect of which exemptive relief is being sought] of Rule 61-501;

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON __________ (name(s) of the applicant(s)] having represented to the Director as follows:

[Insert numbered representations disclosing all information relevant to the granting of the relief. Without limiting the generality of the foregoing, include representations: (i) as to how Rule 61-501 would apply in the absence of the requested relief; and (ii) explaining why it is not contrary to the public interest to grant the requested relief. ]

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS DECIDED pursuant to section 9.1 of Rule 61-501 that, in connection with __________ [brief description of the transaction in respect of which exemptive relief is requested], _________ [name(s) of applicants] shall not be subject to the requirements in section(s) _____ [list the provisions of Rule 61-501 in respect of which exemptive relief is being sought] of Rule 61-501, provided that ____________ [name(s) of applicant(s)] comply with the other applicable provisions of Rule 61-501 and [insert the numbered terms and conditions].

Dated ______________

___________________ (Name)

___________________ (Title)