Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Application for certain resale reliefand for listing representations relief in connection with aseries of transactions involving the distribution by an issuerof securities of a subsidiary of the issuer to the issuer'ssecurityholders, and the subsequent sale by the issuer of itsinterest in the subsidiary to a third party -- resale reliefgranted subject to conditions.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 38(3), 53 and 74(1).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

MANITOBA, ONTARIO, QUÉBEC,NEWFOUNDLAND AND

LABRADOR, NEW BRUNSWICK, NOVASCOTIA,

THE YUKON TERRITORY, THE NORTHWESTTERRITORIES

AND NUNAVUT

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

GENERAL MOTORS CORPORATION,

HUGHES ELECTRONICS CORPORATION

AND THE NEWS CORPORATION LIMITED

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Québec and the Yukon Territory (the "Hughes DistributionRelief Jurisdictions") has received an application fromGeneral Motors Corporation ("GM"), Hughes ElectronicsCorporation ("Hughes") and The News Corporation Limited("News Corporation") for a decision under the securitieslegislation (the "Legislation") of each of the HughesDistribution Relief Jurisdictions that the Registration Requirementsand the Prospectus Requirements shall not apply to trades toholders of GM common stock in connection with the transactionsdescribed below;

AND WHEREAS the Decision Maker in eachof Québec, Manitoba, New Brunswick, the Northwest Territories,the Yukon Territory and Nunavut (together, the "News DistributionRelief Jurisdictions") has received an application fromGM, Hughes and News Corporation for a decision under the Legislationof each of the News Distribution Relief Jurisdictions that theRegistration Requirements and the Prospectus Requirements shallnot apply to a distribution by News Corporation of News CorporationPreferred ADSs in connection with the transactions describedbelow;

AND WHEREAS the Decision Maker in eachof Québec, British Columbia, Saskatchewan, Manitoba,Ontario, Nova Scotia, Newfoundland and Labrador, the Yukon Territory,the Northwest Territories and Nunavut (the "Resale Jurisdictions")has received an application from GM, Hughes and News Corporationfor a decision under the Legislation of each of the Resale Jurisdictionsthat the first trade in (and in Québec, the alienationof) the securities acquired pursuant to the transactions describedbelow shall be exempt from the Prospectus Requirements;

AND WHEREAS the Decision Makers in Québec,Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland and Labradorand Nova Scotia (collectively, the "Hughes Listing ReliefJurisdictions") have received an application from GM, Hughesand News Corporation for a decision under the Legislation ofeach of the Hughes Listing Relief Jurisdictions that GM, Hughesand News Corporation may represent in a consent solicitationdisclosure document being sent to shareholders that Hughes commonstock will be listed on the New York Stock Exchange;

AND WHEREAS the Decision Makers in Québec,Manitoba and Nova Scotia (collectively, the "News ListingRelief Jurisdictions") have received an application fromGM, Hughes and News Corporation for a decision under the Legislationof each of the News Listing Relief Jurisdictions that GM, Hughesand News Corporation may represent in a consent solicitationdisclosure document being sent to shareholders that News CorporationPreferred ADSs will be listed on the New York Stock Exchange;

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Québec 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 Québec Commission Notice 14-101;

AND WHEREAS GM, Hughes and News Corporationhave represented to the Decision Makers that:

1. GM is a corporation incorporated underthe laws of the State of Delaware and has its principal executiveoffices located in Detroit, Michigan. GM is primarily engagedin the automotive industry and, through its wholly owned subsidiary,Hughes, the telecommunications and media industries. GM isthe world's largest manufacturer of automotive vehicles. GMalso has financing and insurance operations and, to a lesserextent, is engaged in other industries.

2. GM currently has two classes of commonstock outstanding: common stock, $1-2/3 par value per share("GM $1-2/3 par value common stock") and Class Hcommon stock, $0.10 par value per share ("GM Class Hcommon stock"). GM Class H common stock is a "trackingstock" of GM designed to provide holders with financialreturns based on the financial performance of Hughes.

3. GM $1-2/3 par value common stock is listedon The Toronto Stock Exchange under the symbol "GM".GM Class H common stock is not listed on any Canadian stockexchange. GM $1-2/3 par value common stock and GM Class Hcommon stock are listed on exchanges outside of Canada, includingthe New York Stock Exchange ("NYSE"), on which suchstocks are listed under the symbols "GM" and "GMH",respectively.

4. As of June 19, 2003, based on GM's stocktransfer records, there were approximately:

(a) 1,108,119,000 shares of GM Class H commonstock outstanding worldwide;

(b) 200,000 shares of GM Class H commonstock outstanding and held directly by residents of Canada,representing approximately 0.02% of the total outstandingshares of GM Class H common stock;

(c) 560,704,000 shares of GM $1-2/3 parvalue common stock outstanding worldwide; and

(d) 866,000 shares of GM $1-2/3 par valuecommon stock outstanding and held directly by residentsof Canada, representing approximately 0.16% of the totaloutstanding shares of GM $1-2/3 par value common stock.

5. GM is a reporting issuer in the provincesof Ontario and Québec and is a "foreign issuer(SEDAR)", as defined in National Instrument 13-101 --System for Electronic Document Analysis and Retrieval (SEDAR).GM is not a reporting issuer in any other province or territoryof Canada and has no present intention of becoming a reportingissuer in any of these jurisdictions.

6. GM is subject to the reporting requirementsof the United States Securities Exchange Act of 1934 (the"1934 Act").

7. Hughes is a corporation incorporated underthe laws of the State of Delaware and has its principal executiveoffices located in El Segundo, California. Hughes is a world-leadingprovider of digital television entertainment, broadband satellitenetworks and services on a global basis and has developeda wide range of entertainment, information and communicationsservices for home and business use, including video, datavoice, multimedia and Internet services. Hughes is currentlya wholly owned subsidiary of GM.

8. Hughes currently has two classes of commonstock outstanding: common stock, par value $0.01 per share("Hughes common stock") and Class B common stock,par value $0.01 per share ("Hughes Class B common stock").

9. Hughes is not a reporting issuer in anyCanadian province or territory.

10. News Corporation is a corporation incorporatedunder the laws of the Commonwealth of Australia and has itsprincipal executive offices located in Surry Hills, New SouthWales, Australia. News Corporation is a diversified internationalmedia and entertainment company with operations in a numberof industry segments, including filmed entertainment, television,cable network programming, magazines and inserts, newspapersand book publishing. The activities of News Corporation areconducted principally in the United States, the United Kingdom,Italy, Asia, Australia and the Pacific Basin.

11. News Corporation currently has two typesof shares outstanding: preferred limited voting ordinary shares("Preferred Ordinary Shares") and ordinary shares("Ordinary Shares").

12. News Corporation also has outstandingpreferred American depositary shares ("News CorporationPreferred ADSs"), representing four Preferred OrdinaryShares, and ordinary American depositary shares ("NewsCorporation Ordinary ADSs"), representing four OrdinaryShares. The News Corporation Preferred ADSs and the News CorporationOrdinary ADSs are listed on the NYSE and traded under thesymbol "NWS.A." and "NWS", respectively.In accordance with the rules of the NYSE, the Preferred OrdinaryShares and Ordinary Shares are also listed on the NYSE solelyin connection with the listing of the News Corporation PreferredADSs and the News Corporation Ordinary ADSs, but without theability to trade.

13. Each holder of News Corporation PreferredADSs is entitled to withdraw the underlying Preferred OrdinaryShares at any time by surrendering the American DepositoryReceipts representing the News Corporation Preferred ADSswith the Depository, as defined in the amended and restateddeposit agreement dated as of December 3, 1996, as amendedby the letter agreement dated as of December 17, 2001, betweenNews Corporation, Citibank, N.A., as depositary, and the holdersfrom time to time of the News Corporation Preferred ADSs.

14. As of June 23, 2003, based on News Corporation'sstock transfer records, there were approximately:

(a) 2,097,411,000 Ordinary Shares, 3,230,088,000Preferred Ordinary Shares, 465,456,000 News CorporationPreferred ADSs and 86,297,000 News Corporation OrdinaryADSs outstanding worldwide; and

(b) 48,000 Ordinary Shares, 35,000 PreferredOrdinary Shares, 3,050 News Corporation Preferred ADSs and2,350 News Corporation Ordinary ADSs outstanding and helddirectly by residents of Canada, representing approximately0.0007% of the News Corporation Preferred ADSs and 0.003%of the total News Corporation Ordinary ADSs.

15. News Corporation is not a reporting issuerin any Canadian province or territory.

16. News Publishing Australia Limited ("NPAL")is a corporation incorporated under the laws of Delaware andhas principal executive offices located in New York, New York.NPAL is a wholly owned subsidiary of News Corporation. NPALengages, through its subsidiaries, in News Corporation's businessesconducted in the United States. NPAL is the subsidiary ofNews Corporation that is acquiring 34% of Hughes pursuantto the Transactions (as defined below).

17. NPAL is not a reporting issuer in anyCanadian province or territory.

18. GMH Merger Sub, Inc. ("GMH MergerSub") is a corporation incorporated under the laws ofDelaware. GMH Merger Sub does not carry on any active businessand has been incorporated solely for the purpose of effectingthe Transactions (as defined below).

19. GMH Merger Sub is not a reporting issuerin any Canadian province or territory.

20. GM, Hughes and News Corporation have announcedplans to enter into a series of transactions (the "Transactions")that would result in the separation of the business of Hughesfrom GM and the acquisition by News Corporation of 34% ofHughes outstanding capital stock.

21. Pursuant to the Transactions, GM willamend its restated certificate of incorporation to, amongother things, make the GM Class H common stock redeemablein exchange for shares of Hughes common stock.

22. In order to split-off the Hughes business(the "Split-Off"), GM will distribute to each holderof GM Class H common stock one share of Hughes common stockin exchange for and in redemption of each share of GM ClassH common stock the holder owns (the "Hughes Distribution").As a result, all outstanding shares of GM Class H common stockwill be redeemed and cancelled.

23. Prior to the Hughes Distribution, Hugheswill declare and pay to GM a U.S.$275 million special cashdividend, which is intended to provide GM consideration forthe value enhancement to GM Class H common stockholders arisingfrom the exchange of GM Class H common stock, a tracking stock,for asset-based Hughes common stock.

24. After the Hughes Distribution, there willbe no shares of GM Class H common stock outstanding. GM $1-2/3par value common stock will remain outstanding and will beGM's only class of common stock.

25. Immediately prior to the Split-Off, GMwill own a number of shares of Hughes Class B common stockrepresenting GM's approximately 19.8% retained economic interestin Hughes. Simultaneously with the Split-Off, GM will sellall of its shares of Hughes Class B common stock to NPAL (the"GM/News Stock Sale").

26. News Corporation will pay GM a fixed priceof U.S.$14.00 per share in cash for 80% of the shares of HughesClass B common stock. For the other 20% of the shares of HughesClass B common stock purchased from GM, News Corporation mayelect to pay for such shares in the form of News CorporationPreferred ADSs, cash or in a combination of News CorporationPreferred ADSs and cash.

27. Upon the simultaneous completion of theSplit-Off and the GM/News Stock Sale, News Corporation willindirectly own approximately 19.8% of the outstanding equityin Hughes and the former GM Class H common stockholders willown approximately 80.2% of the outstanding equity in Hughes.Immediately following the Split-Off and the GM/News StockSale, News Corporation, through its NPAL subsidiary, willthen increase its ownership in Hughes to 34% by acquiringan additional approximately 14.2% of the outstanding Hughescommon stock from the former GM Class H common stockholdersthat receive Hughes common stock in the split-off share exchange(the "News Stock Acquisition"). News Corporationwill acquire these additional shares by merging GMH MergerSub, a wholly owned subsidiary of NPAL, with and into Hughes(the "Merger"). Hughes will be the surviving companyin the Merger.

28. As part of the Merger, each share of Hughescommon stock (all of which will be held by the former GM ClassH common stockholders) will be converted into the right toreceive (i) approximately 0.82336 of a share of Hughes commonstock, and (ii) News Corporation Preferred ADSs, cash or acombination of News Corporation Preferred ADSs and cash (atNews Corporation's election) worth approximately U.S.$2.47,subject to adjustment.

29. News Corporation is a party to the mergeragreement for, among other things, the purpose of distributingcash and/or News Corporation Preferred ADSs to holders ofHughes common stock (the "News Distribution") onthe completion of the Merger. The Merger constitutes a "three-corneredmerger" in that News Corporation will cause GMH MergerSub, an indirect wholly owned subsidiary of News Corporationto merge with and into Hughes, with Hughes continuing as thesurviving corporation.

30. As a result of the Merger, the formerGM Class H common stockholders will retain approximately 82.3%of the Hughes common stock received in the Split-Off. Theother approximately 17.7% of the Hughes common stock receivedin the Split-Off will be exchanged in the Merger.

31. Immediately after the Merger, each shareof Hughes Class B common stock will automatically convertinto one share of Hughes common stock and Hughes common stockwill be the only common stock of Hughes that is outstanding.

32. Application will be made to list the Hughescommon stock and News Corporation Preferred ADSs on the NYSE.Such stock will not be listed on any exchange or quoted onany market in Canada. Accordingly, no market for the Hughescommon stock and News Corporation Preferred ADSs is expectedto develop in Canada.

33. Upon completion of the Transactions, aftergiving effect to the Hughes Distribution, residents in Canadawill not own, directly or indirectly, more than 10 percentof the outstanding shares of Hughes common stock and willnot represent in number more than 10 percent of the totalnumber of owners, directly or indirectly, of Hughes commonstock and, after giving effect to the News Distribution, residentsin Canada will not own, directly or indirectly, more than10 percent of the outstanding Preferred Ordinary Shares (assumingthat each outstanding News Corporation Preferred ADS was exchangedfor the underlying Preferred Ordinary Shares) and will notrepresent in number more than 10 percent of the total numberof owners, directly or indirectly, of Preferred Ordinary Shares(assuming that each outstanding News Corporation PreferredADS was exchanged for the underlying Preferred Ordinary Shares).

34. The amendments to GM's restated certificateof incorporation in connection with the Split-Off requirethe approval of GM stockholders. In addition, GM is askingits stockholders to ratify the Split-Off, the GM/News StockSale, the News stock acquisition and the new Hughes certificateof incorporation which ratification is a condition to thecompletion of the Transactions. GM is seeking such approvaland ratifications pursuant to a consent solicitation process.GM, as sole stockholder of Hughes, has already approved theMerger and adopted the merger agreement. In addition, NPAL,as the sole stockholder of GMH Merger Sub, has approved theMerger and adopted the merger agreement. Also, the Hughesand News Corporation boards of directors have unanimouslyapproved the Transactions, and the GM board of directors approvedthe Transactions by unanimous vote of all those directorspresent at the applicable GM board meeting.

35. The Transactions will be carried out inaccordance with applicable U.S. federal securities laws andU.S. state corporate laws. The requisite GM common stockholderapproval of the Transactions will be sought under such laws,and GM common stockholders resident in Canada will have thebenefit of any rights and remedies in respect of the consentsolicitation disclosure document and related materials furnishedin respect of the Transactions as are available under applicableU.S. laws.

36. Holders of GM $1-2/3 par value commonstock and GM Class H common stock resident in Canada willbe furnished with the consent solicitation disclosure documentand all other materials mailed to GM common stockholders inthe United States (except to the extent that such other materialsare of relevance only to U.S. residents or U.S. citizens),as applicable, that provide detailed information about theTransactions.

37. Following the Transactions, all continuousdisclosure materials relating to Hughes that are furnishedto Hughes common stockholders generally will also be furnishedto registered Hughes common stockholders resident in Canada,and all continuous materials relating to News Corporationthat are furnished to its News Corporation Preferred ADS holdersgenerally will also be furnished to registered News CorporationADS holders resident in Canada.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (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 ineach of the Hughes Distribution Relief Jurisdictions under theLegislation of such jurisdictions is that trades made in connectionwith the Hughes Distribution shall be exempt from the RegistrationRequirements and Prospectus Requirements of the Legislationof such jurisdictions;

AND THE DECISION of the Decision Makersin each of the News Distribution Relief Jurisdictions underthe Legislation of such jurisdictions is that trades made inconnection with the News Distribution shall be exempt from theRegistration Requirements and the Prospectus Requirements ofthe Legislation of such jurisdictions;

AND THE DECISION of the Decision Makersin each of the Resale Jurisdictions under the Legislation ofsuch jurisdictions is that the first trade (and in Québec,the alienation) of the shares of Hughes common stock acquiredpursuant to the distributions referred to above shall be exemptfrom the Prospectus Requirements, provided that:

(a) after giving effect to the issuance ofthe shares of Hughes common stock, and any other shares ofHughes common stock that are issued at the same time or aspart of the same distribution, residents of Canada will:

(i) not own directly or indirectly morethan ten percent (10%) of the outstanding shares of Hughescommon stock; and

(ii) not represent in number more than tenpercent (10%) of the total number of owners directly orindirectly of shares of Hughes common stock; and

(b) Hughes was not a reporting issuer in anyjurisdiction that provides for a reporting issuer regime otherthan Québec at the date of the distribution; and

(c) such first trade (and in Québec,such alienation) is made through an exchange or a market outsideof Canada, or to a person or company outside of Canada.

AND THE DECISION of the Decision Makersin each of the Resale Jurisdictions under the Legislation ofsuch jurisdictions is that the first trade (and in Québec,the alienation) of the News Corporation Preferred ADSs acquiredpursuant to the distributions referred to above shall be exemptfrom the Prospectus Requirements, provided that:

(a) after giving effect to the issuance ofthe News Corporation Preferred ADSs, and any other News CorporationPreferred ADSs that are issued at the same time or as partof the same distribution, residents of Canada will:

(i) not own directly or indirectly morethan ten percent (10%) of the outstanding Preferred OrdinaryShares (assuming that each outstanding News CorporationPreferred ADS was exchanged for the underlying PreferredOrdinary Shares); and

(ii) not represent in number more than tenpercent (10%) of the total number of owners directly orindirectly of Preferred Ordinary Shares (assuming that eachoutstanding News Corporation Preferred ADS was exchangedfor the underlying Preferred Ordinary Shares); and

(b) News Corporation was not a reporting issuerin any jurisdiction that provides for a reporting issuer regimeother than Québec at the date of the distribution;and

(c) such first trade (and in Québec,such alienation) is made through an exchange or a market outsideof Canada, or to a person or company outside of Canada.

AND THE DECISION of the Decision Makersin each of the Hughes Listing Relief Jurisdictions and the NewsListing Relief Jurisdictions under the Legislation is that GM,Hughes and News Corporation may represent in their consent solicitationdisclosure document, an amended copy of which was filed withthe United States Securities Exchange Commission on July 24,2003, that following the Transactions, Hughes common stock andNews Corporation Preferred ADSs will be listed on the New YorkStock Exchange.

August 18, 2003.

"Daniel Laurion"