Mutual Reliance Review System for ExemptiveRelief Applications -- securities of issuer registered undersection 12 of the 1934 Act -- issuer not required to registerunder United States Investment Company Act of 1940 -- reliefgranted from requirement to file annual and interim financialstatements prepared in accordance with Canadian GAAP and auditedin accordance with Canadian GAAS -- relief granted from requirementto include in a short form prospectus annual and interim financialstatements prepared in accordance with Canadian GAAP and auditedin accordance with Canadian GAAS -- relief conditional uponissuer preparing annual and interim financial statements inaccordance with US GAAP and audited in accordance with US GAAS-- issuer to provide Canadian GAAP reconciliation for two yearsfollowing date of decision.
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 77, 78, 80(b)(iii).
R.R.O. 1990, Reg. 1015, as am., s. 2.
National Instrument 44-101 Short Form Distributions(2000) 23 O.S.C.B. (supp.) 867.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ONTARIO, QUEBEC, BRITISH COLUMBIA,ALBERTA,
SASKATCHEWAN, MANITOBA, NOVASCOTIA,
PRINCE EDWARD ISLAND AND NEWFOUNDLAND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
RESEARCH IN MOTION LIMITED
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the Decision Maker) in each of Ontario,Quebec, British Columbia, Alberta, Saskatchewan, Manitoba, NovaScotia, Prince Edward Island and Newfoundland and Labrador (collectively,the Jurisdictions) has received an application from ResearchIn Motion Limited (the Filer) for a decision under the securitieslegislation of the Jurisdictions (the Legislation) that:
(i) the requirements contained in the Legislation(the CD GAAP & GAAS Requirements) to file annual and interimfinancial statements prepared in accordance with Canadiangenerally accepted accounting principles (Canadian GAAP) and,in the case of the annual financial statements, audited inaccordance with Canadian generally accepted auditing standards(Canadian GAAS); and
(ii) the requirements contained in the Legislation(the Prospectus GAAP & GAAS Requirements) to include ina short form prospectus annual and interim financial statementsprepared in accordance with Canadian GAAP and, in the caseof the annual financial statements, audited in accordancewith Canadian GAAS,
will not apply to the Filer;
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 the Filer has representedto the Decision Makers as follows:
1. The Filer is a designer, manufacturer andmarketer of wireless solutions for the worldwide mobile communicationsmarket.
2. The Filer was originally incorporated pursuantto articles of incorporation under the laws of the Provinceof Ontario on March 7, 1984.
3. The Filer's head office is located in Waterloo,Ontario and operates in offices in North America, Europe andAsia Pacific.
4. The Filer's common shares (the Common Shares)are listed on the Nasdaq Stock Market (Nasdaq: RIMM) and theToronto Stock Exchange (TSX: RIM).
5. The Filer is a reporting issuer in eachof the Jurisdictions and is not in default of any requirementsunder the Legislation.
6. The Filer is qualified to file a shortform prospectus under National Instrument 44-101 ShortForm Distributions.
7. The Filer has a class of securities registeredunder section 12 of the Securities Act of 1934 (the1934 Act). The Filer is not registered or required to be registeredas an investment company under the Investment Company Actof 1940 of the United States of America.
8. The Filer's year end for fiscal 2004 isFebruary 28, 2004 and its first quarter for fiscal 2004 endedon May 31, 2003.
9. The Filer currently prepares its annualand interim financial statements in accordance with CanadianGAAP. The annual financial statements of the Filer are currentlyaudited in accordance with Canadian GAAS.
10. The Filer will continue to comply withthe requirements of its jurisdiction of incorporation (Ontario)as they relate to the preparation and audit of annual financialstatements in accordance with Canadian GAAP and Canadian GAAS,respectively (and the delivery thereof), which requirementsare prescribed by the Business Corporations Act (Ontario).
11. The Filer is satisfied that it has obtainedand applied the necessary level of expertise of the generallyaccepted accounting principles in the United States that theSecurities and Exchange Commission (the SEC) has identifiedas having substantial authoritative support, as supplementedby Regulation S-X and Regulation S-B under the 1934 Act (USGAAP) to support the preparation of US GAAP financial statements.
12. The Filer's audit committee has takensteps to ensure it has, or has access to, the necessary expertisein relation to US GAAP and that management has put in placesystems to ensure that the appropriate levels and numbersof staff have and will maintain the level of expertise inUS GAAP necessary to prepare reliable, high quality financialstatements.
13. The Filer's audit committee has satisfieditself as to the adequacy of the expertise of the audit engagementteam and the audit firm in relation to the application ofUS GAAP and generally accepted auditing standards in the UnitedStates, as supplemented by the SEC's rules on auditor independence(US GAAS).
AND WHEREAS under the System, this MRRSDecision Document evidences the decisions of each Decision Maker(collectively, the Decisions);
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecisions has been met;
THE DECISION of the Decision Makers underthe Legislation is that the CD GAAP & GAAS Requirementswill not apply to the Filer's annual and interim financial statementsrequired to be filed under the Legislation provided that:
(a) the Filer's Common Shares are registeredunder section 12 of the 1934 Act and the Applicant is notregistered or required to register as an investment companyunder the United States Investment Company Act of 1940;
(b) the Filer's annual and interim financialstatements required to be filed under the Legislation areprepared in accordance with United States GAAP and, in thecase of annual financial statements, audited in accordancewith United States GAAS;
(c) the notes to the first two sets of annualcomparative financial statements filed after the date of thisDecision and the notes to the interim financial statementsfor interim periods during those two years:
(i) explain the material differences betweenCanadian GAAP and United States GAAP that relate to recognition,measurement and presentation,
(ii) quantify the effect of material differencesbetween Canadian GAAP and United States GAAP that relateto recognition, measurement and presentation, includinga tabular reconciliation between net income reported inthe financial statements and net income computed in accordancewith Canadian GAAP, and
(iii) provide disclosure consistent withCanadian GAAP requirements to the extent not already reflectedin the financial statements;
(d) the notes to the financial statementsidentify the accounting principles used to prepare the financialstatements;
(e) the Filer files a supplement to the ManagementDiscussion and Analysis ("MD&A") relating toeach of the financial statements referred to in paragraph(c) above that will restate, based on financial informationof the Applicant prepared in accordance with or reconciledto Canadian GAAP, those parts of the MD&A that:
(i) are based on financial statements ofthe Filer prepared in accordance with United States GAAP,and
(ii) would contain material differencesif they were based on financial statements of the Filerprepared in accordance with Canadian GAAP;
(f) the Filer uses United States GAAP generallyon a going-forward basis for all of its financial statementsfiled under its continuous disclosure requirements in theJurisdictions;
(g) the Filer files an auditor's report onthe annual financial statements filed under paragraph (c)above that is prepared in accordance with United States GAASand that:
(i) contains an unqualified opinion,
(ii) identifies all financial periods presentedfor which the auditor has issued an auditor's report; ifthe Filer has changed its auditor and one or more of thecomparative periods presented in the financial statementswere audited by a different auditor, the auditor's reportmust refer to any former auditor's report(s) on the comparativeperiods, and
(iii) identifies the auditing standardsused to conduct the audit and the accounting principlesused to prepare the financial statements; and
(h) this Decision, as it relates to the jurisdictionof a Decision Maker, will terminate upon publication in finalform of any legislation or rule of that Decision Maker dealingwith acceptable accounting principles and auditing standards,except proposed National Instrument 52-107 Acceptable AccountingPrinciples, Auditing Standards and Reporting Currencyin substantially the same form as published on May 16, 2003,that conflicts with any provision of this Decision;
July 25, 2003.
"Harold P. Hands"
"Wendell S. Wigle"
AND THE FURTHER DECISION of the DecisionMakers is that the Prospectus GAAP and GAAS Requirements willnot apply to the Filer's annual and interim financial statementsincluded in a short form prospectus filed under National Instrument44-101, provided that:
(a) the Filers satisfies conditions (a) through(g) of the Decision, above; and
(b) this Decision, as it relates to the jurisdictionof a Decision Maker, will terminate upon publication in finalform of any legislation or rule of that Decision Maker dealingwith acceptable accounting principles and auditing standards,except proposed National Instrument 52-107 Acceptable AccountingPrinciples, Auditing Standards and Reporting Currencyin substantially the same form as published on May 16, 2003,that conflicts with any provision of this Decision.
July 25, 2003.