Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications -- issuer bids -- convertible debentures-- debentures convertible into common shares at a conversionprice far in excess of current value of common shares -- conversionfeature of no material value -- debentures trade like non-convertible,subordinated, unsecured debt -- convertible debentures are out-of-the-money-- circular to include summary of opinion letter on convertibilityfeature -- applicant exempt from valuation requirement.

Applicable Rule

61-501 -- Insider Bids, Issuer Bids, Going PrivateTransactions and Related Party Transactions, ss. 3.3, 3.4, and9.1.















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Ontario, Alberta, British Columbia, Manitoba, Newfoundlandand Labrador, Nova Scotia, Quebec and Saskatchewan (the "Jurisdictions")has received an application (the "Application") fromCounsel Corporation ("Counsel") for a decision underthe securities legislation of the Jurisdictions (the "Legislation")that the requirement contained in the Legislation to obtaina formal valuation (the "Formal Valuation Requirement")of the 6% Convertible Subordinated Debentures due October 31,2003 (the "Debentures") shall not apply to Counselin connection with its proposed offer (the "Offer")to acquire its outstanding Debentures;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this Application;

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

AND WHEREAS Counsel has represented tothe Decision Makers that:

1. Counsel is governed by the BusinessCorporations Act (Ontario). Its head office is locatedin Toronto, Ontario.

2. Counsel is a reporting issuer or the equivalentin each Jurisdiction and is not in default of any requirementsof the Legislation in the Jurisdictions.

3. Counsel's authorized capital consists ofan unlimited number of preferred shares and an unlimited numberof common shares (the "Common Shares"). As at June2, 2003 there were no preferred shares outstanding and 20,965,972Common Shares were issued and outstanding.

4. The Common Shares are listed for tradingon The Toronto Stock Exchange (the "TSX") and TheNasdaq SmallCap Market and the Debentures are listed for tradingon the TSX.

5. As at June 2, 2003, Counsel had outstandingUS$41,566,000 of the Debentures.

6. The Debentures were issued under a trustindenture (the "Indenture") dated as of October31, 1996.

7. The Debentures are unsecured and are convertibleat the holder's option into Common Shares at any time priorto the earlier of October 31, 2003 and the last business dayimmediately preceding the date specified for redemption. Originally,the Debentures were convertible at a price of US$13.875 perCommon Share. On June 8, 1999, Counsel declared a specialdividend of C$1.50 per Common Share (the "Special Dividend")to holders of Common Shares of record as at July 12, 1999.As a result of the Special Dividend, the conversion pricefor the Debentures was adjusted from US$13.875 to US$11.726effective July 20, 1999 (the "First Adjustment Date").

8. On April 30, 2000, Counsel paid a dividendin kind which resulted in a further reduction of the conversionprice for the Debentures to US$11.472, effective April 30,2000 (the "Second Adjustment Date"). All other attributesof the Debentures remain unchanged.

9. Over the twelve-month period immediatelypreceding June 2, 2003, the Common Shares have traded on theTSX in a range between C$2.15 and C$3.70 per Common Share.

10. On July 19, 1999, the last trading daybefore the First Adjustment Date on which the Debentures weretraded, the closing price of the Debentures on the TSX wasUS$780.00 per US$1,000 principal amount.

11. On April 20, 2000 the last trading daybefore the Second Adjustment Date on which the Debentureswere traded, the closing price of the Debentures on the TSXwas US$680.00 per US$1,000 principal amount.

12. On June 2, 2003, the closing price ofthe Debentures on the TSX was US$620.00 per US$1,000 principalamount of Debentures.

13. Over the twelve-month period immediatelypreceding June 2, 2003, the Debentures traded on the TSX ononly 108 out of the 252 trading days, with an average dailytrading price of US$679.86 on the days traded, and a pricerange per US$1,000 principal amount of US$610.00 to US$795.00.

14. Since November 1, 2001, Counsel has beenentitled to redeem the Debentures at any time at par plusaccrued and unpaid interest.

15. The Indenture provides that Counsel maypurchase any or all of the Debentures at any time when Counselis not in default under the Indenture. Counsel is not in defaultunder the Indenture.

16. On December 12, 2002, Counsel filed andthe TSX accepted a Notice of Intention to Make a Normal CourseIssuer Bid (the "Notice"). Pursuant to the Notice,Counsel may acquire through the TSX's facilities up to a maximumof US$2,128,050 of the outstanding Debentures, representingapproximately 5% of the principal amount of Debentures outstandingas at December 9, 2002. Pursuant to the Notice, as of June2, 2003, the Applicant has acquired through the TSX's facilities:

(a) Between February 26, 2003 and April9, 2003 US$109,000 principal amount of the Debentures ata price of US$692.00 per US$1,000 principal amount.

(b) Between April 16, 2003 and April 23,2003 US$100,000 principal amount of the Debentures at aprice of US$682.40 per US$1,000 principal amount.

(c) Between May 14, 2003 and May 16, 2003US$14,000 principal amount of the Debentures at a priceof US$620.00 per US$1,000 principal amount.

(d) On May 26, 2003 US$772,000 principalamount of the Debentures at a price of US$625.00 per US$1,000principal amount.

17. Counsel proposes to make the Offer forits outstanding Debentures. The Offer will be an "issuerbid" within the meaning of the Legislation in the Jurisdictionsbecause the Debentures are convertible debt securities. Nopurchases will be made under the Notice from the date theintention to make the Offer is publicly announced to the completionof the Offer.

18. In a letter (the "Opinion Letter")dated May 22, 2003, BMO Nesbitt Burns ("BMO NB")advised Counsel that, in BMO NB's opinion:

(i) the Debenture holders' conversion optionis of no material value, and

(ii) the Debentures trade on the TSX likenon-convertible, subordinated, unsecured debt.

19. The Offer will be made in compliance withthe requirements in the Legislation applicable to formal bidsmade by issuers, except to the extent exemptive relief isgranted by the Decision Makers.

20. The issuer bid circular provided to holdersof the Debentures in connection with the Offer will includea summary of the Opinion Letter.

AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, 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 requirement contained in the Legislationto comply with the Formal Valuation Requirement shall not applyto Counsel provided that Counsel complies with the other requirementsin the Legislation applicable to formal bids made by issuers.

July 4, 2003.

"Ralph Shay"