Healthpro Procurement Services Inc.

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from prospectus requirement in connection with the issuance from time to time of common shares to members -- Filer is a group purchasing organization for Canadian health sector -- Filer established to help its members, primarily hospitals and health care institutions, to reduce costs of procurement through volume purchasing and supplier rebates -- each member required to enter into a shareholders' agreement and to subscribe for shares for a nominal amount -- shares not issued for investment purposes -- members have no expectation of realizing an economic return in their capacity as shareholders -- no market for Shares and both shareholder agreement and articles provide for restrictions on their transfer -- articles also prohibit any invitation to the public to subscribe for shares -- relief granted subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 74(1).

January 7, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

HEALTHPRO PROCUREMENT SERVICES INC.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision (the Exemption Sought) under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) exempting the Filer from the prospectus requirement in connection with the issuance from time to time of common shares of the Filer (the Shares) to Members (as defined below).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Quebec, Saskatchewan and the Yukon Territory.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was incorporated pursuant to the Business Corporations Act (Ontario) on November 21, 1995.

2. The Filer's head office is located in Ontario.

3. The authorized capital of the Filer consists of an unlimited number of Shares.

4. The Filer is not at present, and does not intend to become, a reporting issuer in any jurisdiction.

5. There is no market for the Shares and the Shares are not traded on any marketplace as defined in National Instrument 21-101 Marketplace Operation.

6. The Filer acts as a buying group for its participants, which are primarily hospitals and health care institutions (the Members).

7. The Filer was established to further economies of scale in the purchasing of supplies and equipment by the Members and to benefit the Members through the use of a collective purchasing power that would otherwise be unavailable to them.

8. The Filer passes through the benefits of volume rebates from suppliers, net of expenses, to the Members through the payment of patronage dividends.

9. Each Member is required to enter into a participation and shareholders' agreement (the Shareholder Agreement) pursuant to which, among other things, the Member agrees to subscribe for Shares at a price of $1.00 per Share.

10. The ownership of the Shares permits Members to vote at shareholder meetings of the Filer and participate in the governance of the Filer.

11. The Filer's articles of incorporation (the Articles) prohibit any invitation to the public to subscribe for Shares. Shares are issued only to Members.

12. The Articles provide the Filer with the right to redeem the Shares on notice for an amount equal to $1.00, plus any declared and unpaid dividends.

13. Since the Filer distributes its surplus funds in the form of patronage dividends, as described above, no dividends are declared or paid on the Shares.

14. The Shareholder Agreement and the Articles restrict the right to transfer the Shares.

15. The Shareholder Agreement provides that upon termination of a Member's participation in the Filer, the Filer will purchase for cancellation any Share held by a Member for $1.00.

16. The Filer currently has 251 Shares outstanding held by Members in Alberta, British Columbia, Manitoba, Newfoundland and Labrador, the Northwest Territories, Nova Scotia, Nunavut, Ontario, Saskatchewan and the Yukon Territory.

17. The Filer previously received an exemption order, dated October 29, 1996, in respect of the issuance of Shares from the Ontario Securities Commission (the Current Exemption).

18. The Filer has also issued Shares to health care institutions in Alberta, British Columbia, Manitoba, Newfoundland, the Northwest Territories, Nova Scotia, Nunavut, Saskatchewan and the Yukon Territory. The issuance of Shares to the Members outside of Ontario was not within the scope of the Current Exemption and the Filer inadvertently failed to apply for relief in respect of those trades.

19. The Filer believes that all of the Members outside of Ontario are hospitals or health authorities or similar entities and that the accredited investor exemption in National Instrument 45-106 Prospectus and Registration Requirements (and various predecessor instruments) likely would have been available for most of these trades.

20. Other than the failure to obtain relief for the issuance of Shares in jurisdictions other than Ontario, as described above, the Filer is not in default of any requirements under the Legislation.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:

(a) prior to the issuance of a Share to a Member, the Filer shall deliver to such Member a copy of

(i) the Articles and by-laws of the Filer, and all amendments thereto;

(ii) the most recent annual audited financial statements of the Filer, and a copy of any subsequent interim financial statements;

(iii) this decision; and

(iv) a statement to the effect that, as a consequence of this decision, certain protections, rights and remedies provided by the Legislation, including statutory rights of rescission or damages, will not be available to the Member and that certain restrictions are imposed on the subsequent disposition of the Share;

(b) prior to the issuance of a Share to a Member, such Member shall have executed a copy of the Shareholder Agreement;

(c) the exemptions contained in this decision shall cease to be effective if any of the provisions of the Articles or the Shareholder Agreement relevant to the exemption granted by this ruling (including, the provisions relating to the transferability of the Shares) are amended in any material respect without written notice to, and consent of, the principal regulator;

(d) the Filer prepares and sends audited financial statements to each Member on an annual basis; and

(e) the first trade in any Share by a Member to a person or company other than the Filer is deemed to be a distribution.

The further decision of the principal regulator under the Legislation is that the Current Exemption is revoked.