Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications -- issuer bid for convertible debentures-- prospectus-level disclosure required in issuer bid circularas issuer may be offering its securities as consideration underthe issuer bid -- disclosure to include financial statementsof issuer for the three most recently completed financial years-- financial statements for the year 2000 have been restatedfor discontinued operations and do not include report of auditors-- information not relevant to debentureholders -- issuer unableto obtain consent of auditor to inclusion of year 2000 auditor'sreport because auditor ceased practising public accounting andno longer consents to the use of previously issued auditors'reports -- applicant exempt from requirement to provide year2000 financial statements on condition that certain other disclosureincluded in circular.

Applicable Statutory Provision

Securities Act, R.S.O. 1990, c. S.5, as amended,s. 104(2)(c).

Applicable Rules

Rule 41-501 - General Prospectus Requirements,clause 4.1(1)(a).















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Ontario, Alberta, British Columbia, Manitoba, Newfoundlandand Labrador, Nova Scotia, Quebec and Saskatchewan (collectively,the "Jurisdictions") has received an application (the"Application") from Counsel Corporation ("Counsel")for a decision under the securities legislation of the Jurisdictions(collectively, the "Legislation") that, in connectionwith its proposed offer (the "Offer") to acquire itsoutstanding 6% Convertible Subordinated Debentures due October31, 2003 (the "Debentures"), the requirement containedin the Legislation to include the financial statements for thefinancial year ended December 31, 2000 (the "2000 Financials")in the Circular (as defined below) shall not apply to Counsel;

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

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

AND WHEREAS Counsel has represented tothe Decision Makers as follows:

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 requirementsunder the Legislation.

3. Counsel's authorized capital consists ofan unlimited number of preferred shares and an unlimited numberof common shares (the "Common Shares"). As at July3, 2003 there were no preferred shares outstanding and 20,708,172Common Shares outstanding.

4. As at July 3, 2003, Counsel has outstandingUS$41,566,000 principal amount of the Debentures.

5. 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.

6. Counsel proposes to make the Offer forits outstanding Debentures. The consideration to be offeredunder the Offer may include other securities of Counsel. TheOffer will be an "issuer bid" within the meaningof the Legislation.

7. Counsel shall prepare an issuer bid circular(the "Circular") in connection with the Offer tobe delivered to the holders of the Debentures (the "Debentureholders").

8. Under the Legislation, if an issuer isoffering securities as consideration under an issuer bid,it is required to include in the circular accompanying theissuer bid the information prescribed for the form of prospectusappropriate for the issuer. As Counsel may be offering itssecurities as consideration under the Offer, it must includewith a prospectus the financial statements for the three mostrecently completed financial years ended more than 90 daysbefore the date of the prospectus. Accordingly, Counsel isrequired to include the 2000 Financials in the Circular.

9. Counsel's annual report for the financialyear ended December 31, 2002 (the "2002 Annual Report"),containing audited financial statements for the years endedDecember 31, 2002 and December 31, 2001 shall be mailed toDebentureholders as part of the Circular.

10. The 2000 Financials, other than the balancesheet for the year ended December 31, 2000, are included ascomparatives in the 2002 Annual Report; however, such statementshave been restated in accordance with generally accepted accountingprinciples for discontinued operations and do not includethe report of auditors thereon.

11. The 2000 Financials relate entirely todiscontinued operations and, as such, this information isnot relevant to the Debentureholders in considering whetherto tender to the Offer. In addition, the consent of ArthurAndersen to the inclusion of their report on the 2000 Financials,is unavailable. Accordingly, statutory remedies otherwiseavailable to holders of Debentures in respect of the 2000Financials are unavailable in this circumstance.

12. Counsel's 2002 Annual Report containsa discussion as to why the 2000 Financials are not relevantto Debentureholders.

13. The Offer will be made, and the Circularwill contain information, in compliance with the requirementsin the Legislation applicable to formal bids made by issuers,including the Financial Statement Requirements, except tothe extent exemptive relief is granted by the Decision Makers.

AND WHEREAS pursuant to the System thisMRRS Decision Document evidences the decision of each DecisionMaker (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, in connection with the Offer, the requirementcontained in the Legislation to include the 2000 Financialsin the Circular shall not apply to Counsel provided that Counselcomplies with the other requirements in the Legislation applicableto formal bids made by issuers, except to the extent exemptiverelief is granted by the Decision Makers.

July 23, 2003.

"Robert W. Davis"
"Harold P. Hands"