Securities Law & Instruments

Headnote

Relief granted to a wholly owned subsidiaryof another reporting issuer in respect of annual informationform and management's discussion and analysis requirements,subject to certain conditions, including that the business ofthe subsidiary continues to be the same as the business of theparent.

Applicable Ontario Statutory Provisions

Rule 51-501 AIF and MD&A.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

SASKATCHEWAN, ONTARIO ANDQUÉBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANADIAN OIL SANDS LIMITED

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the Decision Maker) in each of Saskatchewan,Ontario and Québec (the Jurisdictions) has received anapplication from Canadian Oil Sands Limited (the Corporation)for a decision under the securities legislation of the Jurisdictions(the Legislation) that the requirements contained in the Legislation:

1. that the Corporation file with such DecisionMakers an annual information form; and

2. that the Corporation file with such DecisionMakers and, where applicable, send to its securityholdersmanagement's discussion and analysis of financial conditionand results of operations with respect to its audited annualfinancial statements and its unaudited interim financial statements,

(collectively, the AIF Requirements) shallnot apply to the Corporation;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the System)created pursuant to National Policy 12-201, the Ontario SecuritiesCommission is the principal regulator for this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 or in Québec Commission Notice 14-101;

AND WHEREAS the Corporation has representedto the Decision Makers that:

1. The Trust is an unincorporated open-endedinvestment trust formed under the laws of the Province ofAlberta pursuant to a trust indenture dated October 5, 1995,as amended and restated as of July 5, 2001 and as furtheramended by a supplemental indenture dated as of August 7,2001 and a notice of change in quarterly distribution datesdated December 10, 2001 (the Trust Indenture). The trusteeof the Trust is Computershare Trust Company of Canada (Computershare).

2. The Trust has been a reporting issuer orthe equivalent in each of the Jurisdictions since 1995, andto its knowledge is not in default of any requirements underthe Legislation of any such Jurisdiction.

3. The Trust has a current AIF within themeaning of National Instrument 44-101 Short Form ProspectusDistributions (NI 44-101).

4. The entire beneficial interest in the Trustis held by the holders of its trust units (Units), of whicha maximum of 500,000,000 Units may be authorized and issuedpursuant to the Trust Indenture. As of April 8, 2003, therewere 79,538,258 Units issued and outstanding.

5. The Units are participating equity securitiesof the Trust and currently trade on the Toronto Stock Exchange.

6. As at the date hereof, the Trust has threewholly-owned subsidiary entities, namely the Corporation,Canadian Oil Sands Commercial Trust (CT) and 834541 AlbertaLtd. The Corporation and CT are directly owned by the Trust,and 834541 Alberta Ltd. is directly owned by CT.

7. The Trust indirectly holds an aggregate31.74% working interest in the Syncrude oil sands projectnear Fort McMurray, Alberta through the Corporation (whichhas a direct 21.74% interest), CT (which has a direct 9.5%interest) and 834541 Alberta Ltd. (which has a direct 0.5%interest).

8. The Trust has no material assets otherthan its interests in the Syncrude project.

9. The Corporation is a corporation organizedand subsisting under the laws of Alberta. The Corporation'sprincipal and registered offices are located in Calgary, Alberta.

10. Pursuant to the terms of the Trust Indenture,the Corporation is the manager of the Trust and is thereforeresponsible for the management of the business and affairsof the Trust, including the provision of finance, legal, engineering,accounting, treasury and investor relations services. TheCorporation is also the manager of CT.

11. The business of the Corporation is tooversee the Trust's indirect 31.74% working interest in theSyncrude project through its role as the manager of both theTrust and CT. The Corporation does not have any material operationsthat are independent of this role.

12. The Corporation currently holds a direct21.74% interest in Syncrude. Subject to receipt of a favourabletax opinion or ruling from Canada Customs and Revenue Agency,the Trust intends to effect a reorganization of its interestspursuant to which the Corporation will ultimately become thedirect or indirect holder of the Trust's entire 31.74% indirectinterest in Syncrude.

13. The authorized share capital of the Corporationconsists of an unlimited number of common shares and an unlimitednumber of preferred shares, issuable in series.

14. All of the issued and outstanding sharesof the Corporation are held by the Trust. The Corporationhas no other securities outstanding as at the date of thisapplication except USD $70 million of 7.625% Senior Notesdue 2007, USD $250 million of 7.9% Senior Notes due 2021 andUSD $74 million of 8.2% Senior Notes due 2027 (collectively,the "Senior Notes") and CAD $150 million of 5.75%unsecured medium term notes due 2008 issued under the ShelfProspectus (as defined in paragraph 16 below).

15. All of the Senior Notes were sold on aprivate placement basis to purchasers in the United Statespursuant to exemptions from the registration requirementsof the United States Securities Act of 1933.

16. The Corporation became a reporting issueror the equivalent in each of the Jurisdictions on March 27,2003 upon the issuance of a receipt for a short form baseshelf prospectus (the Shelf Prospectus) under National Instrument44-102 Shelf Distributions (NI 44-102) relating tothe sale of up to CAD $750,000,000 of unsecured medium termnotes (the Notes).

17. The Notes will be issued under a trustindenture dated as of April 2, 2003 between the Corporationand Computershare (the Note Indenture).

18. Pursuant to a guarantee agreement (theGuarantee) dated as of April 2, 2003 between the Trust andComputershare, as trustee under the Note Indenture, any paymentsto be made by the Corporation as stipulated in the terms ofthe Notes or in an agreement governing the rights of the holdersof Notes (Noteholders) will be fully and unconditionally guaranteedby the Trust, such that the Noteholders shall be entitledto receive payment thereof from the Trust within 15 days ofany failure by the Corporation to make a payment as stipulated.Until such time as the 9.5% interest in Syncrude that is currentlyheld directly by CT is transferred, directly or indirectly,to the Corporation, the Notes will be similarly guaranteedby CT.

19. The Corporation was qualified under NI44-101 to file a prospectus in the form of a short form prospectuson the basis that the Notes are, pursuant to the Guarantee,guaranteed non-convertible debt securities as contemplatedby Section 2.5 thereof.

20. In accordance with NI 44-101 and NI 44-102,the Shelf Prospectus provides disclosure about the consolidatedbusiness and operations of the Trust and incorporates by referencethe required disclosure documents of the Trust.

21. The Shelf Prospectus provides disclosurewith respect to both the Trust and CT guarantees of the Notes,and each of the Trust and CT signed the certificate page ascredit supporters within the meaning of NI 44-101.

22. The Notes have been assigned approvedratings within the meaning of NI 44-101, namely "Baa2"with a negative outlook by Moody's Investors Service, Inc.and "BBB+" with a negative outlook by Standard &Poor's Corporation.

23. The Notes will not be listed on any securitiesexchange.

AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the Decision);

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

THE DECISION of the Decision Makers pursuantto the Legislation is that the AIF Requirements shall not applyto the Corporation, so long as:

1. the business of the Corporation continuesto be the same as the business of the Trust, in that the businessof the Corporation continues to be the management and oversight,through ownership or control, of all of the material assetsof the Trust, including, without limitation, the Trust's entireinvestment in the Syncrude project;

2. the Trust remains a reporting issuer orthe equivalent under the Legislation and continues to complywith all timely and continuous disclosure requirements thereunder;

3. all financial statements filed by the Trustunder the Legislation are prepared on a consolidated basisin accordance with Canadian GAAP;

4. the Trust remains the direct or indirectbeneficial owner of all of the issued and outstanding votingsecurities of the Corporation;

5. the Trust continues to fully and unconditionallyguarantee the Notes as to the payments required to be madeby the Corporation to the holders of the Notes;

6. the Corporation does not distribute additionalsecurities other than: (i) the Notes or other debt securitiescontemplated by paragraph 7 below; (ii) to the Trust or toentities that are wholly-owned, directly or indirectly, bythe Trust; or (iii) debt securities on a private placementbasis pursuant to exemptions from the prospectus requirementsof applicable Legislation; and

7. if the Corporation hereafter distributesadditional debt securities (other than debt securities thatare issued to the Trust or to entities that are wholly-owned,directly or indirectly, by the Trust or are distributed ona private placement basis pursuant to exemptions from theprospectus requirements of applicable Legislation), the Trustshall fully and unconditionally guarantee such debt securitiesas to the payments required to be made by the Corporationto the holders of such debt securities.

May 20, 2003.

"John Hughes"