Canadian Oil Sands Limited and Canadian Oil Sands Trust - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Application from reporting issuer subsidiary of reporting issuer parent for a decision that the subsidiary be exempted from the following requirements of National Instrument 51-102 Continuous Disclosure Obligations:

(a) the requirement to file a business acquisition report in prescribed form;

(b) the requirement to file certain documents including constating documents, by-laws or other corresponding instruments, any securityholder or voting trust agreement, any securityholders' rights plans or other similar plans, or any other contract that creates or can reasonably be regarded as materially affecting the rights or obligations of its securityholders generally; and

(c) the requirement to file certain material contracts.

Relief granted subject to terms and conditions, including without limitation condition that the business of the subsidiary continue to be the same as the business of the parent; the parent remain a reporting issuer; all financial statements filed by the parent are prepared on a consolidated basis in accordance with Canadian GAAP; the parent remain the direct or indirect beneficial owner of all of the issued and outstanding voting securities of the subsidiary; the parent continue to fully and unconditionally guarantee certain debt of the subsidiary; the subsidiary does not issue additional securities, subject to certain exceptions; and the subsidiary file certain documents of the parent.

Rules Cited

National Instrument 51-102, Continuous Disclosure Obligations, ss. 8.2, 12.1, 12.2 and 13.1.

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO,

QUÉBEC, NEW BRUNSWICK, NEWFOUNDLAND AND LABRADOR

AND NOVA SCOTIA

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANADIAN OIL SANDS LIMITED

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Newfoundland and Labrador and Nova Scotia (the "Jurisdictions") has received an application from Canadian Oil Sands Limited (the "Corporation") and Canadian Oil Sands Trust (the "Trust", and together with the Corporation, "Canadian Oil Sands") for a decision that the Corporation be exempted from the following requirements pursuant to National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102"), and in Québec by a revision of the general order that will provide the same result as an exemption order:

(a) the requirement that if a reporting issuer completes a significant acquisition it must file a business acquisition report including financial statement disclosure in the form prescribed by NI 51-102 for the significant acquisition with the Decision Makers;

(b) the requirement that a reporting issuer must file copies of its constating documents, by-laws or other corresponding instruments, any securityholder or voting trust agreement that the reporting issuer has access to, any securityholders' rights plans or other similar plans, or any other contract of a reporting issuer or a subsidiary of a reporting issuer that creates or can reasonably be regarded as materially affecting the rights or obligations of its securityholders generally, with the Decision Makers; and

(c) the requirement that a reporting issuer must file copies of any contract that it or any of its subsidiaries is a party to, other than a contract entered into in the ordinary course of business, that is material to the issuer and was entered into within the last financial year, or before the last financial year but is still in effect, with the Decision Makers;

(collectively, the "Reporting Requirements").

2. AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System") created pursuant to National Policy 12-201, the Alberta Securities Commission is the principal regulator for this application;

3. AND WHEREAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions;

4. AND WHEREAS the Corporation has represented to the Decision Makers that:

4.1 The Trust is an unincorporated open-ended investment trust formed under the laws of the Province of Alberta pursuant to a trust indenture dated October 5, 1995, as amended and restated as of July 5, 2001 and as further amended by a supplemental indenture dated as of August 7, 2001 and a notice of change in quarterly distribution dates dated December 10, 2001 (the "Trust Indenture"). The trustee of the Trust is Computershare Trust Company of Canada ("Computershare").

4.2 The Trust is a reporting issuer or the equivalent in each of the Jurisdictions and is not in default of any requirements under the securities legislation of the Jurisdictions (the "Legislation").

4.3 The entire beneficial interest in the Trust is held by the holders of its trust units ("Units"), of which a maximum of 500,000,000 Units have been created and may be issued pursuant to the Trust Indenture. As of June 10, 2004, there were 87,778,646 Units issued and outstanding.

4.4 The Units are participating equity securities of the Trust and currently trade on the Toronto Stock Exchange (the "TSX"). As of June 10, 2004, the Units had a quoted market value on the TSX of over $3.5 billion.

4.5 The Trust has two direct wholly-owned subsidiary entities, namely the Corporation and Canadian Oil Sands Commercial Trust ("CT").

4.6 The Trust holds an aggregate 35.49% working interest in the Syncrude oil sands project near Fort McMurray, Alberta (the "Syncrude Project") indirectly through the Corporation (which has a direct 31.74% interest) and CT (which has an indirect 3.75% interest).

4.7 The Trust has no material assets other than its interests in the Syncrude Project.

4.8 The Corporation is a corporation organized and subsisting under the laws of Alberta. The Corporation's principal and registered offices are located in Calgary, Alberta.

4.9 Pursuant to the terms of the Trust Indenture, the Corporation is the manager of the Trust and is therefore responsible for the management of the business and affairs of the Trust, including the provision of finance, legal, engineering, accounting, treasury and investor relations services. The Corporation is also the manager of CT.

4.10 The business of the Corporation is to oversee the Trust's indirect 35.49% working interest in the Syncrude Project through its role as the manager of both the Trust and CT. The Corporation does not have any material operations that are independent of this role.

4.11 The Corporation currently holds a direct 31.74% interest in the Syncrude Project.

4.12 The authorized share capital of the Corporation consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series.

4.13 All of the issued and outstanding common shares of the Corporation are held by the Trust and all of the issued and outstanding preferred shares of the Corporation are held by CT.

4.14 The Corporation has no other securities outstanding as at the date of this application except USD $300 million of 5.8% Senior Notes due 2013, USD $70 million of 7.625% Senior Notes due 2007, USD $250 million of 7.9% Senior Notes due 2021 and USD $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, CAD $20 million of floating rate unsecured medium term Notes due 2007 with interest payable quarterly based on 3 month Canadian dollar bankers' acceptances plus 60 basis points and CAD $175 million of 3.95% unsecured medium term Notes due 2007 (as defined in paragraph 4.16, below).

4.15 All of the Senior Notes were sold on a private placement basis pursuant to exemptions from the prospectus and registration requirements of the United States Securities Act of 1933 and have been issued: (a) to "qualified institutional buyers", as defined in Rule 144A under the United States Securities Act of 1933, which includes entities such as insurance companies, investment companies, plans, trust funds, business development companies and U.S. registered dealers; and (b) to a small number of foreign purchasers in offshore transactions, which include investment companies and insurance companies.

4.16 The Corporation became a reporting issuer or the equivalent in each of the Jurisdictions on March 27, 2003 upon the issuance of a receipt for the Shelf Prospectus under National Instrument 44-102 Shelf Distributions ("NI 44-102") relating to the sale of up to CAD $750,000,000 of unsecured medium term notes (the "Notes").

4.17 The Corporation is not in default of any requirements under the Legislation.

4.18 The Notes have been and will continue to be issued under a trust indenture dated as of April 2, 2003 between the Corporation and Computershare (the "Note Indenture").

4.19 Pursuant to a guarantee agreement (the "Guarantee") dated as of April 2, 2003 between the Trust and Computershare, as trustee under the Note Indenture, any payments to be made by the Corporation as stipulated in the terms of the Notes or in an agreement governing the rights of the holders of Notes ("Noteholders") will be fully and unconditionally guaranteed by the Trust, such that the Noteholders shall be entitled to receive payment thereof from the Trust within 15 days of any failure by the Corporation to make a payment as stipulated.

4.20 The Corporation was qualified under National Instrument 44-101 Short Form Prospectus Distributions ("NI 44-101") to file a prospectus in the form of a short form prospectus on the basis that the Notes are, pursuant to the Guarantee, guaranteed non-convertible debt securities as contemplated by Section 2.5 thereof.

4.21 In accordance with NI 44-101 and NI 44-102, the Shelf Prospectus provides disclosure about the consolidated business and operations of the Trust and incorporates by reference the required disclosure documents of the Trust.

4.22 The Shelf Prospectus provides disclosure with respect to the Trust guarantee of the Notes and the Trust signed the certificate page as a credit supporter within the meaning of NI 44-101.

4.23 The Notes have been assigned approved ratings 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.

4.24 The Corporation is a venture issuer, as defined in NI 51-102. The Notes will not be listed on any securities exchange.

4.25 The Decision Makers in all of the Jurisdictions other than Prince Edward Island are party to an MRRS Decision Document dated May 21, 2003 (the "Continuous Disclosure Decision") exempting the Corporation from the requirements contained in the Legislation: (a) to file and send to its securityholders audited annual comparative financial statements, unaudited interim comparative financial statements or annual reports containing such statements; (b) to issue and file a news release and file a report with the Decision Makers upon the occurrence of a material change; (c) to comply with the proxy and proxy solicitation requirements; and (d) that an insider of the Corporation file reports with the Decision Makers disclosing such insider's ownership of, control or direction over, securities of the Corporation, so long as certain conditions contained in the Continuous Disclosure Decision are satisfied, including the filing by the Corporation of the annual comparative audited consolidated financial statements and the interim comparative consolidated financial statements of the Trust.

4.26 The Corporation has complied with the conditions contained in the Continuous Disclosure Decision.

4.27 The Corporation has filed a letter dated April 14, 2004 with the Decision Makers pursuant to Section 13.2 of NI 51-102 informing the Decision Makers that the Corporation intends to Continue to rely on the exemptions granted to the Corporation under the Continuous Disclosure Decision.

4.28 The Decision Makers in Saskatchewan, Ontario and Québec are party to an MRRS Decision Document dated May 20, 2003 (the "AIF Decision") exempting the Corporation from the requirements contained in the securities legislation of Saskatchewan, Ontario and Québec: (a) to file an annual information form; and (b) to file and send to its securityholders management's discussion and analysis with respect to its audited annual financial statements and its unaudited interim financial statements, so long as certain conditions contained in the AIF Decision are satisfied.

4.29 The Corporation has complied with the conditions contained in the AIF Decision.

4.30 The Decision Makers in all of the Jurisdictions other than Prince Edward Island are party to an MRRS Decision Document dated January 12, 2004 (the "Reserves Reporting Decision") exempting the Corporation from Sections 2.1 and 2.2 of National Instrument 51- 101 Standards of Disclosure for Oil and Gas Activities, and in Québec, the requirements of National Policy Statement No. 2-B Guide for Engineers and Geologists Submitting Oil and Gas Reports to Canadian Provincial Securities Administrators until such time as NI 51-101 is implemented in Québec, so long as certain conditions contained in the Reserves Reporting Decision are satisfied.

4.31 The Corporation has complied with the conditions contained in the Reserves Reporting Decision.

5. AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");

6. AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Makers with the jurisdiction to make the Decision has been met;

7. THE DECISION of the Decision Makers pursuant to section 13.1 of NI 51-102, and in Quebec pursuant to Section 321 of the Act, is that the Reporting Requirements, where applicable, shall not apply to the Corporation, so long as:

7.1 the business of the Corporation continues to be the same as the business of the Trust, in that the business of the Corporation continues to be the management and oversight, through ownership or control, of all of the material assets of the Trust, including, without limitation, the Trust's entire investment in the Syncrude Project;

7.2 the Trust remains a reporting issuer or the equivalent under the Legislation and continues to comply with all timely and continuous disclosure requirements thereunder;

7.3 all financial statements filed by the Trust under the Legislation are prepared on a consolidated basis in accordance with Canadian GAAP;

7.4 the Trust remains the direct or indirect beneficial owner of all of the issued and outstanding voting securities of the Corporation;

7.5 the Trust continues to fully and unconditionally guarantee the Notes as to the payments required to be made by the Corporation to the holders of the Notes;

7.6 the Corporation does not distribute additional securities other than: (i) the Notes or other debt securities contemplated by paragraph 7.7 below; (ii) to the Trust or to entities that are wholly-owned, directly or indirectly, by the Trust; or (iii) debt securities issued on a private placement basis pursuant to exemptions from the prospectus requirements of applicable Legislation;

7.7 if the Corporation hereafter distributes additional debt securities (other than debt securities that are issued to the Trust or to entities that are wholly-owned, directly or indirectly, by the Trust or are distributed on a private placement basis pursuant to exemptions from the prospectus requirements of applicable Legislation) the Trust shall fully and unconditionally guarantee such debt securities as to the payments required to be made by the Corporation to the holders of such debt securities;

7.8 if, in the future, the Corporation completes a significant acquisition, and the Trust is required under NI 51-102 to file a business acquisition report, the Corporation files the business acquisition report and financial statement disclosure for such significant acquisition prepared by the Trust with the Decision Makers; and

7.9 if, in the future, the Trust is required under NI 51-102 to file a contract that it or any of its subsidiaries is a party to, and such contract pertains to the Corporation, the Corporation files the contract with the Decision Makers.

June 25, 2004.

"Mavis Legg"