CP Ships Limited - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief granted from the requirement to provide prospectus-level disclosure in an information circular for a restructuring transaction (amalgamation) - Redeemable preferred shares to be issued pursuant to the amalgamation - Redeemable preferred shares will be redeemed immediately after the completion of the amalgamation - amalgamation, in substance, a cash transaction.

Rules Cited

National Instrument 51-102 - Continuous Disclosure Obligations, Part 9 and s. 13.1(2) and Form 51-102F5 - Information Circular, item 14.2.

November 7, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF ONTARIO AND QUEBÉC

(THE JURISDICTIONS)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CP SHIPS LIMITED (THE FILER)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempt from the requirement in the Legislation to include prospectus level disclosure in a management proxy circular of the Filer relating to the special meeting of its shareholders to consider, and if deemed advisable to approve, among other things, the amalgamation of the Filer with another company in accordance with the Legislation (the Requested Relief).

Application of Principal Regulator System

Under National Policy 12-201 Mutual Reliance Review System for Exemptive Relief Applications (MRRS Policy) and Multilateral Instrument 11-101 Principal Regulator System (MI 11-101):

(a) the Ontario Securities Commission is the principal regulator for the Filer under the MRRS Policy,

(b) the Autorité des marches financiérs is the principal regulator for the Filer under MI 11-101,

(c) the Filer is relying on the exemption in Part 3 of MI 11-101 in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, the Yukon Territory and Nunavut, and

(d) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation amalgamated under the Business Corporations Act (New Brunswick) (the NBBCA). The common shares of the Filer (the Common Shares) are listed under the symbol "TEU" on each of the Toronto Stock Exchange and the New York Stock Exchange. The Filer is a reporting issuer or the equivalent in all provinces and territories of Canada and, to the knowledge of the Filer, it is not in default of any of the requirements of the Legislation. The head office of the Filer is located in Gatwick, United Kingdom.

2. The authorized share capital of the Filer consists of: (1) an unlimited number of Common Shares, (2) an unlimited number of first preferred shares and (3) an unlimited number of second preferred shares. As at the close of business on August 26, 2005, 90,534,722 Common Shares and no first preferred shares or second preferred shares were issued and outstanding.

3. The Filer intends to call a meeting of its shareholders (the Meeting) to be held on or about December 14, 2005 to consider, and if deemed advisable to approve, among other things, the amalgamation of the Filer with Ship Acquisition Inc. (SA and the Amalgamation).

4. The Amalgamation will take place subsequent to an offer to purchase the outstanding Common Shares at a price of U.S.$21.50 per Common Share which was made to all shareholders of the Filer by SA pursuant to a formal offer and take over circular dated August 30, 2005 (the Offer). The Offer, as extended, expired on October 18, 2005.

5. Pursuant to the Offer, SA owns 83,972,849 Common Shares. Such shares represent approximately 82.07% of the issued and outstanding Common Shares, calculated on a fully diluted basis.

6. SA is a corporation incorporated under the laws of the Province of New Brunswick and is an indirect, wholly owned subsidiary of TUI AG (TUI). SA was incorporated solely for the purpose of holding the Common Shares and it conducts no other business. SA is not a reporting issuer or the equivalent in any province or territory of Canada.

7. TUI is a Hanover-based listed stock corporation incorporated under the laws of Germany and indirectly owns all of the shares in the capital of SA.

8. The Amalgamation will be a business combination within the meaning of Ontario Securities Commission Rule 61-501 Insider Bids, Issuer Bids, Going Private Transactions and Related Party Transactions (Rule 61-501) and will be a subsequent acquisition transaction following the Offer, as 620692 N.B. Inc., sole shareholder of SA and an indirect wholly owned subsidiary of TUI, will be the sole holder of common shares of Amalco (as defined in paragraph 10 below) following completion of the Amalgamation.

9. In connection with the Meeting, the Filer expects to mail to each shareholder (i) a notice of the Meeting; (ii) a form of proxy; (iii) a management proxy circular (the Circular); and (iv) a letter of transmittal. The Circular will be prepared in accordance with the NBBCA and applicable securities laws.

10. Pursuant to the Amalgamation, among other things, the Filer and SA will amalgamate (the corporation resulting from the amalgamation is herein referred to as Amalco), holders of Common Shares (other than dissenting shareholders and SA) will receive one redeemable special share in the capital of Amalco (each, a Special Share) for each Common Share held immediately prior to the Amalgamation and 620692 N.B. Inc. will receive all common shares in the capital of Amalco.

11. Immediately following completion of the Amalgamation, each Special Share will be redeemed for U.S.$21.50 in cash in accordance with the terms of the Special Shares contained in the articles of amalgamation of Amalco (the Redemption Amount), which is the same per share consideration paid by SA for Common Shares purchased under the Offer.

12. All holders of Common Shares, including insiders of the Filer (but excluding dissenting shareholders and SA), will receive identical consideration for their Common Shares pursuant to the Amalgamation.

13. Subject to applicable law, no new certificates evidencing the Special Shares will be issued to the holders of Common Shares.

14. The consideration paid by Amalco on redemption of the Special Shares will be funded directly or indirectly by 620692 N.B. Inc. and/or TUI, indirectly the sole shareholder of 620692 N.B. Inc.

15. TUI has advised that it intends to ensure that Amalco will have sufficient funds to pay in full the aggregate redemption price on the redemption of the Special Shares.

Decision

The Decision Makers being satisfied that each has jurisdiction to make this decision and that the relevant test under the Legislation has been met, the Requested Relief is granted provided that the Filer complies with all other provisions of the Legislation applicable to the management proxy circular in respect of the Meeting.