Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - Cash bid made in Canada - Bid made inaccordance with the laws of Hong Kong - De minimis exemptionunavailable because Hong Kong not recognized jurisdiction inOntario - Bid exempted from the requirements of Part XX, subjectto certain conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as amended,ss. 93(1)(e), 95 to 100 and 104(2)(c).

Recognition Orders Cited

In the Matter of the Recognition of CertainJurisdictions (Clauses 93(1)(e) and 93(3((h) of Act) (1997)20 OSCB 1035.















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof the provinces of British Columbia and Ontario (the "Jurisdictions")has received an application from Huachen Automotive Group HoldingsCompany Limited ("Huachen"), Mr. Wu Xiao An, Mr. HongXing, Mr. Su Qiang, Mr. He Tao (collectively the "ManagementDirectors" and, together with Huachen, the "Offerors"),CLSA Limited ("CLSA") and Brilliance China AutomotiveHoldings Limited (the "Target" and, together withthe Offerors and CLSA, the "Applicants") for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that the formal take-over bid requirements in the Legislation,including the provisions relating to delivery of an offer andtake-over bid circular and any notices of change or variationthereto, delivery of a directors' circular and any notices ofchange or variation thereto, minimum deposit periods and withdrawalrights, take-up of and payment for securities tendered to atake-over bid, disclosure, financing, restrictions upon purchasesof securities, identical consideration and collateral benefits(collectively, the "Take-over Bid Requirements") shallnot apply to the all cash offer (the "Offer") madeby CLSA for and on behalf of the Offerors to acquire securitiesof the Target not already owned by the Offerors;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the Ontario Securities Commission is selected as the principalregulator for this application;

AND WHEREAS, unless otherwise defined,terms herein have the meaning set out in National Instrument14-101;

AND WHEREAS the Applicants have representedto the Decision Makers that:

1. Huachen is a People's Republic of China("PRC") state-owned limited liability company whichwas established under the laws of the PRC on September 16,2002 and is wholly beneficially owned by the Liaoning ProvincialGovernment. Huachen's principal place of business is locatedin Shenyang City, Liaoning Province, PRC. Huachen's principalbusiness is the investment in automotive-related companiesin the PRC.

2. As at the date hereof, Huachen has a registeredcapital of RMB 200,000,000.

3. Neither Huachen nor the Target is, or hasany intention of becoming, a reporting issuer under the lawsof any province in Canada.

4. The Target is a corporation incorporatedunder the laws of the country of Bermuda. The Target's registeredoffice is located at Cedar House, 41 Cedar Avenue, Hamilton,HM12, Bermuda. The Target's principal place of business inHong Kong is located in Rooms 2303-2306, 23rd Floor, GreatEagle Centre, 23 Harbour Road, Wanchai, Hong Kong. The Targetis an investment holding company. The principal activitiesof the Target's subsidiaries are the manufacturing and sellingof minibuses, sedans and automotive components in the PRC.

5. The authorized share capital of the Targetconsists of 5,000,000,000 ordinary shares with a par valueUS$0.01 each (the "Ordinary Shares"). As at thedate hereof, 3,666,052,900 Ordinary Shares (including OrdinaryShares in the form of ADSs (as defined below)) were issuedand outstanding.

6. The Ordinary Shares (not including OrdinaryShares in the form of ADSs (as defined below)) are currentlylisted on The Stock Exchange of Hong Kong Limited. Americandepository shares ("ADSs"), representing 100 OrdinaryShares each, are listed and posted for trading on The NewYork Stock Exchange, Inc. under the symbol "CBA".

7. As at November 19, 2002, the register ofADS holders maintained by The Bank of New York (in its capacityas the depositary for the ADSs) indicated that one residentof Ontario is the registered holder of 500 ADSs, representing50,000 Ordinary Shares (or approximately 0.0014% of the OrdinaryShares then outstanding), and one resident of British Columbiais the registered holder of 150 ADSs, representing 15,000Ordinary Shares (or approximately 0.0004% of the OrdinaryShares then outstanding).

8. On December 18, 2002, as a result of arm'slength negotiations, Huachen purchased approximately 39.446%of the Ordinary Shares then outstanding from another shareholderof the Target at a price of HK$0.10 per Ordinary Share.

9. Also on December 18, 2002, Huachen grantedcall options to each of the Management Directors in respectof an aggregate of approximately 9.446% of the Ordinary Shares,which call options are exercisable for a period of three yearscommencing approximately six months after the completion ofthe Offer at a price of HK$0.95 per Ordinary Share.

10. Pursuant to the Hong Kong Code on Takeoversand Mergers (the "Hong Kong Takeovers Code") ofthe Hong Kong Securities and Futures Commission ("HKSFC"),Huachen and any party acting in concert with Huachen, by virtueof having acquired over 30% of the voting rights of the Target,are required to make the conditional mandatory Offer for allof the Ordinary Shares and all securities convertible intoOrdinary Shares that are not already owned by Huachen andany party acting in concert with Huachen.

11. By virtue of entering into call optionagreements with Huachen, the Management Directors are presumed,under the Hong Kong Takeovers Code, to be acting in concertwith Huachen. As a result, the Management Directors and Huachenhave agreed to join together to make the conditional mandatoryOffer required to be made under the Hong Kong Takeovers Code.

12. CLSA is making the Offer for and on behalfof the Offerors (other than in the United States where theOffer is being made by the Offerors directly). CLSA is a registeredsecurities dealer registered under the Securities Ordinance(Chapter 333 of the Laws of Hong Kong).

13. The Offer is being made in accordancewith the laws of Hong Kong, including the requirements ofthe Hong Kong Takeovers Code and the rules of the HKSFC, andnot pursuant to any exemptions from such requirements. TheOffer is also being made pursuant to an exemption from certainU.S. tender offer rules provided by Rule 14d-1(c) under theSecurities Exchange Act of 1934 (as amended) of the UnitedStates.

14. The Offer is being extended to all holders(other than the Offerors) of Ordinary Shares, ADSs and securitiesconvertible into Ordinary Shares (such as options grantedto employees of the Target). The Offer is required to remainopen for acceptance for at least 28 days following the dateon which documents setting out the terms of the Offer (the"Offer Documents") are first posted. CLSA deliveredthe Offer Documents to the Target shareholders on January9, 2003 and the Offer will remain open until at least February5, 2003.

15. The Offerors cannot rely on the deminimis exemption from the Take-over Bid Requirementsbecause the Decision Makers have not recognized Hong Kongfor this purpose in the Legislation.

16. The Offer will be made on the same termsand conditions to the shareholders of the Target residentin Canada as those applicable to Target shareholders residingoutside Canada.

17. The Offer Documents and all other materialrelating to the Offer, including any amendments, sent by oron behalf of the Offerors to Target shareholders residingoutside Canada shall concurrently be sent to the Target shareholdersresident in Canada and filed with the Decision Makers.

AND WHEREAS under the System, this decisiondocument evidences the decision of each of the Decision Makers(the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the Applicants are exempt from the Take-overBid Requirements in connection with the Offer made by CLSA,for and on behalf of the Offerors, to the Target shareholdersresident in Canada, provided that:

(a) the Offer and all amendments to theOffer are made in compliance with the laws of Hong Kong,including the Hong Kong Takeovers Code; and

(b) the Offer Documents and all other materialsrelating to the Offer, including any amendments, that aresent by or on behalf of the Offeror to Target shareholdersresiding outside Canada are concurrently sent to Targetshareholders resident in Canada and copies of such materialare filed contemporaneously with the Decision Maker in eachJurisdiction.

January 27, 2003.

"Howard I. Wetston"                    "RobertL. Shirriff"