BCE Inc.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Dual application for Exemptive Relief Applications -- Application for relief from the prospectus and first trade requirements for certain trades made in connection with a preferred share exchange offer -- The issuer cannot rely on the take-over bid exemptions in Section 2.16 of National Instrument 45-106 -- Prospectus and Registration Exemptions and in Section 2.11 of National Instrument 45-102 -- Resale of Securities as the preferred shares subject to the exchange offer are not voting securities nor equity securities -- Holders of preferred shares will receive documents that contain prospectus-level disclosure and a fairness opinion -- Holders of preferred shares will have contractual rights of action substantially equivalent to the rights of shareholders in a formal take-over bid -- Relief granted, subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 53, 74(1), 131 and Part XX.

Regulation 11-102 respecting Passport System, s. 4.7(1).

Policy Statement 11-203 respecting Process for Exemptive Relief Applications in Multiple Jurisdictions, ss. 3.6, 5.2(2).

Regulation 45-102 respecting Resale of Securities, ss. 2.6, 2.11.

Regulation 45-106 respecting Prospectus and Registration Exemptions, s. 2.16.

Regulation 62-104 respecting Take-Over Bids and Issuer Bids, s. 2.30 and Form 62-104F1.

OSC Rule 62-504 -- Take-Over Bids and Issuer Bids, Form 62-504F1.

Translation

August 8, 2014

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the "Jurisdictions") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF BCE INC. (the "Filer")

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (together, the "Decision Makers") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation"):

a) for an exemption from the prospectus requirement under the Legislation and the corresponding requirements under the applicable securities legislation of the Local Jurisdictions (defined below) (collectively, the "Prospectus Requirements") in connection with the distribution of BCE Preferred Shares (defined below); and

b) that the first trade of the BCE Preferred Shares is not a distribution under the Legislation and the applicable securities legislation of the Local Jurisdictions, provided that the conditions in Section 2.11 of Regulation 45-102 respecting Resale of Securities ("Regulation 45-102") are satisfied,

(collectively, the "Exemption Sought").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

a) the Autorité des marchés financiers (the "AMF") is the principal regulator for this application;

b) the Filer has provided notice that section 4.7(1) of Regulation 11-102 respecting Passport System ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut (each a "Local Jurisdiction"); and

c) the decision is the decision of the AMF and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

The Filer

1. The Filer is a corporation governed by the Canada Business Corporations Act (the "CBCA").

2. The Filer's registered and head office is located at 1 Carrefour Alexander-Graham-Bell, Building A, 8th Floor, Verdun, Québec, H3E 3B3.

3. The Filer is a reporting issuer in each of the Provinces of Canada (the "Provinces") and, to its knowledge, is currently not in default of securities legislation in any of the Provinces.

4. The authorized capital of the Filer consists of:

a) an unlimited number of voting common shares (the "BCE Common Shares");

b) an unlimited number of first preferred shares, issuable in series (the "BCE Preferred Shares");

c) an unlimited number of second preferred shares, issuable in series; and

d) an unlimited number of non-voting Class B shares.

5. As of July 23, 2014, the Filer had outstanding the following shares in its capital:

a) 778,126,130 BCE Common Shares; and

b) 135,000,000 BCE Preferred Shares.

6. The BCE Common Shares are listed and posted for trading on the Toronto Stock Exchange (the "TSX") and on the New York Stock Exchange.

7. The BCE Preferred Shares are listed and posted for trading on the TSX.

The Company

8. Bell Aliant Inc. (the "Company") is a corporation governed by the CBCA.

9. The Company's registered and head office is located at 7 South Maritime Centre, 1505 Barrington Street, Halifax, Nova Scotia, B3J 3K5.

10. The Company is a reporting issuer in each of the Provinces and, to the knowledge of the Filer, is currently not in default of securities legislation in any of the Provinces.

11. The authorized capital of the Company consists of:

a) an unlimited number of voting common shares (the "Bell Aliant Common Shares"); and

b) an unlimited number of preference shares, issuable in series.

12. To the knowledge of the Filer, the Company has 227,834,039 Bell Aliant Common Shares outstanding.

13. The Bell Aliant Common Shares are listed and posted for trading on the TSX.

14. The Filer and its affiliates own approximately 100,376,270 Bell Aliant Common Shares, representing approximately 44.06% ownership of the outstanding Bell Aliant Common Shares.

15. The Filer has the right to nominate a majority of the directors of the Company, subject to certain conditions, for so long as the Filer owns not less than 30% of the outstanding Bell Aliant Common Shares and certain commercial agreements between Bell Aliant Regional Communications, Limited Partnership ("Bell Aliant LP") and Bell Canada are in place.

Bell Aliant GP

16. Bell Aliant Regional Communications Inc. ("Bell Aliant GP") is a corporation governed by the CBCA.

17. Bell Aliant GP's registered and head office is located at 7 South Maritime Centre, 1505 Barrington Street, Halifax, Nova Scotia, B3J 3K5.

18. Bell Aliant GP is a reporting issuer in each of the Provinces and, to the knowledge of the Filer, is currently not in default of securities legislation in any of the Provinces.

19. The authorized capital of Bell Aliant GP consists of:

a) an unlimited number of voting common shares (the "Bell Aliant GP Common Shares"); and

b) an unlimited number of non-voting common shares.

20. To the knowledge of the Filer, Bell Aliant GP has 101,373,833 Bell Aliant GP Common Shares outstanding.

21. The Bell Aliant GP Common Shares are not listed or posted for trading on any market.

22. All but one of the Bell Aliant GP Common Shares (representing an approximate 99.999% interest in Bell Aliant GP) is owned by the Company. The remaining one Bell Aliant GP Common Share (representing an approximate 0.001% interest in Bell Aliant GP) is held indirectly by the Filer.

23. The Filer has the right to appoint a majority of the directors of Bell Aliant GP, subject to certain conditions, for so long as the Filer owns not less than 30% of the outstanding Bell Aliant Common Shares and certain commercial agreements between Bell Aliant LP and Bell Canada are in place.

Prefco

24. Bell Aliant Preferred Equity Inc. ("Prefco") is a corporation governed by the CBCA.

25. Prefco's registered and head office is located at 7 South Maritime Centre, 1505 Barrington Street, Halifax, Nova Scotia, B3J 3K5.

26. Prefco is a reporting issuer in each Jurisdiction and Local Jurisdiction and, to the knowledge of the Filer, is currently not in default of securities legislation in any of the Jurisdictions or Local Jurisdictions.

27. The authorized capital of Prefco consists of:

a) an unlimited number of voting common shares (the "Prefco Common Shares"); and

b) an unlimited number of preference shares, issuable in series (the "Prefco Preferred Shares").

28. To the knowledge of the Filer, Prefco has outstanding the following shares in its capital:

a) 227,768,734 Prefco Common Shares;

b) 11,500,000 series A preferred shares;

c) 4,600,000 series C preferred shares; and

d) 9,200,000 series E preferred shares.

29. All of the outstanding Prefco Common Shares are held by Bell Aliant GP.

30. The Prefco Preferred Shares are listed and posted for trading on the TSX.

The Offers

31. The Filer, the Company and Prefco have entered into a support agreement dated July 23, 2014 (the "Support Agreement") pursuant to which the Filer has agreed, subject to the terms and conditions of the Support Agreement, to make an offer to:

a) acquire all of the outstanding Bell Aliant Common Shares that it or its affiliates do not already own in exchange for (i) $31 in cash, (ii) 0.6371 of a BCE Common Share, or (iii) $7.75 cash and 0.4778 of a BCE Common Share (with shareholders electing option (i) or (ii) being subject to pro-ration such that the aggregate consideration will be paid 25% in cash and 75% in BCE Common Shares) (the "Common Share Offer"); and

b) exchange all of the outstanding Prefco Preferred Shares for new series of BCE Preferred Shares having economic terms that are the same as the Prefco Preferred Shares (the "Preferred Share Exchange Offer").

32. The Common Share Offer is a formal take-over bid under Regulation 62-104 respecting Take-Over Bids and Issuer Bids ("Regulation 62-104") and Part XX of the Securities Act (Ontario) (the "OSA") and, accordingly:

a) the Filer is required to prepare and deliver a securities exchange take-over bid circular for the Common Share Offer that contains prospectus-level disclosure regarding the Filer and the BCE Common Shares;

b) the distribution of the BCE Common Shares pursuant to the Common Share Offer will be exempt from the Prospectus Requirements by virtue of the "take-over bid" exemption in Section 2.16 of Regulation 45-106 respecting Prospectus and Registration Exemptions ("Regulation 45-106"); and

c) the first trade of BCE Common Shares will not be considered a distribution under Section 2.6 of Regulation 45-102, provided that the conditions in Section 2.11 of Regulation 45-102 are satisfied.

33. The Common Share Offer is also an insider bid under Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions ("Regulation 61-101") and the Common Share Offer is, accordingly, not an arm's length transaction.

34. Given that the Common Share Offer is subject to Regulation 61-101, the Filer will comply with the requirements of Regulation 61-101 for the purposes of the Common Share Offer, including the minority approval and formal valuation requirements set out therein.

35. The Common Share Offer is subject to, among other things:

a) Certain required regulatory approvals applicable to the Common Share Offer (including, without limitation, approval of the TSX and New York Stock Exchange to list the BCE Common Shares and clearance pursuant to the Competition Act (Canada)) being obtained on terms satisfactory to the Filer, acting reasonably; and

b) more than 50% of the Bell Aliant Common Shares (calculated on a fully-diluted basis) held by holders of Bell Aliant Common Shares who are not interested holders of Bell Aliant Common Shares (i.e., holders of Bell Aliant Common Shares who would be excluded from voting as part of the minority in any subsequent acquisition transaction relating to the Bell Aliant Common Shares pursuant to Part 8 of Regulation 61-101) having been validly tendered under the Common Share Offer and having not been withdrawn, which may be waived by the Filer.

36. The board of directors of the Company (the "Company Board") formed a special committee (the "Company Special Committee") to consider the Common Share Offer. The Company Special Committee, following consultation with its financial and legal advisors, unanimously: (a) determined that the consideration to be received under the Common Share Offer is fair, from a financial point of view, to the holders of Bell Aliant Common Shares (other than the Filer and its affiliates), and (b) approved the entering into of the Support Agreement and the making of the unanimous recommendation that holders of Bell Aliant Common Shares accept the Common Share Offer.

37. The Company Board, upon the recommendation of the Company Special Committee, unanimously (with the exception of any interested directors): (a) determined that the consideration to be received under the Common Share Offer is fair, from a financial point of view, to the holders of Bell Aliant Common Shares (other than the Filer and its Affiliates), and (b) approved the entering into of the Support Agreement and the making of the unanimous recommendation that holders of Bell Aliant Common Shares accept the Common Share Offer.

38. For the purposes of Regulation 62-104 and Part XX of the OSA, the Prefco Preferred Shares are neither "voting securities" nor "equity securities".

39. Since the Prefco Preferred Shares are not "voting securities or equity securities", the Preferred Share Exchange Offer would not be considered a formal take-over bid under Regulation 62-104 or Part XX of the OSA and, accordingly, the issuance of the BCE Preferred Shares in connection with the Preferred Share Exchange Offer would not be exempt from the Prospectus Requirement by virtue of the "take-over bid" exemption in Section 2.16 of Regulation 45-106.

40. The Preferred Share Exchange Offer would be subject to, among other things:

a) a minimum tender condition of at least 662/3% of the outstanding Prefco Preferred Shares having been validly deposited and not properly withdrawn; and

b) the conditions of the Common Share Offer set forth in the Support Agreement having been satisfied, or to the extent permitted by applicable law and the terms of the Support Agreement, waived by the Filer such that the Filer will be bound to take up and pay for the Bell Aliant Common Shares validly deposited and not properly withdrawn under the Common Share Offer.

41. The completion of the Preferred Share Exchange Offer is not a condition to the completion of the Common Share Offer. However, the completion of the Common Share Offer is a condition to the completion of the Preferred Share Exchange Offer.

42. The board of directors of Prefco (the "Prefco Board") formed a special committee (the "Prefco Special Committee") to consider the Preferred Share Exchange Offer.

43. In connection with the Preferred Share Exchange Offer, the Prefco Board will prepare and deliver to holders of Preferred Shares a directors' circular (the "Prefco Directors' Circular") in accordance with the requirements of Form 62-104F3 of Regulation 62-104 and Form 62-504F3 of OSC Rule 62-504 -- Take-Over Bids and Issuer Bids ("Rule 62-504").

44. The Prefco Special Committee engaged a financial advisor. The financial advisor has provided the Prefco Special Committee with an opinion that based upon the assumptions, limitations and qualifications set forth therein, as of July 22, 2014, the consideration to be received pursuant to the Preferred Share Exchange Offer is fair, from a financial point of view, to the Preferred Shareholders. A copy of the financial advisor's fairness opinion will be included in the Prefco Directors' Circular.

45. The Prefco Special Committee, following consultation with its financial and legal advisors, unanimously: (a) determined that the consideration to be received under the Preferred Share Exchange Offer is fair, from a financial point of view, to the holders of Prefco Preferred Shares, and (b) approved the entering into of the Support Agreement and the making of the unanimous recommendation that holders of Prefco Preferred Shares accept the Preferred Share Exchange Offer.

46. The Prefco Board, upon the recommendation of the Prefco Special Committee, unanimously (with the exception of any interested directors): (a) determined that the consideration to be received under the Preferred Share Exchange Offer is fair, from a financial point of view, to the holders of Prefco Preferred Shares, and (b) approved the entering into of the Support Agreement and the making of the unanimous recommendation that holders of Prefco Preferred Shares accept the Preferred Share Exchange Offer.

47. The Preferred Share Exchange Offer would not be subject to Regulation 61-101 because the Prefco Preferred Shares are not equity or voting securities. In addition, while Prefco is a "related party" of the Filer, the exchange of the outstanding Prefco Preferred Shares for newly issued BCE Preferred Shares pursuant to the Preferred Share Exchange Offer does not fall within any of the transactions enumerated in paragraphs (a) through (m) of the definition of "related party transaction" as defined in Regulation 61-101. Accordingly, Regulation 61-101 (including the minority approval and formal valuation requirements set out therein) will not apply to the Preferred Share Exchange Offer.

48. Notwithstanding that the Preferred Share Exchange Offer is not a formal take-over bid under Regulation 62-104 or Part XX of the OSA, the Filer intends to comply with the provisions of Regulation 62-104 and Part XX of the OSA that are applicable to a formal take-over bid with respect to the Preferred Share Exchange Offer, including delivery of a take-over bid circular (the "Preferred Share Exchange Offer Circular") in accordance with the requirements of Form 62-104F1 of Regulation 62-104 and Form 62-504F1 of Rule 62-504, and which contains prospectus-level disclosure regarding the Filer and the BCE Preferred Shares.

49. In addition, as an irrevocable term of the Preferred Share Exchange Offer, the Filer proposes to grant holders of Prefco Preferred Shares that tender such shares under the Preferred Share Exchange Offer contractual rights of action for rescission or damages in the event of a misrepresentation in the Preferred Share Exchange Offer Circular, substantially equivalent to the rights of shareholders provided for under Section 222 of the Securities Act (Québec), Section 131 of the OSA and the corresponding provisions of the securities legislation of the Local Jurisdictions. Such rights would be described in the Preferred Share Exchange Offer Circular.

50. Accordingly, in considering the Preferred Share Exchange Offer, holders of Prefco Preferred Shares would have all of the information that they would have received if the Preferred Share Exchange Offer were a formal take-over bid.

51. Holders of Prefco Preferred Shares will also be granted withdrawal rights substantially equivalent to the rights of shareholders provided for under Regulation 62-104 and in Section 98.1 of the OSA.

52. Further, following the completion of the Preferred Share Exchange Offer, the former holders of Prefco Preferred Shares would have all of the rights that they would have if the Preferred Share Exchange Offer were a formal take-over bid.

53. Section 2.16 of Regulation 45-106 provides an exemption from the Prospectus Requirements in circumstances where a security is distributed in connection with a take-over bid in a Jurisdiction or Local Jurisdiction.

54. Since the Preferred Share Exchange Offer is not a "take-over bid" within the meaning of Regulation 62-104 or Part XX of the OSA, the prospectus exemption in Section 2.16 of Regulation 45-106 would not be available and the first trade in the BCE Preferred Shares would be a distribution.

55. The Filer will not treat the Preferred Share Exchange Offer as a take-over bid exempt from the Legislation or the securities legislation of a Local Jurisdiction, except to the extent such exemption, if any, is evidenced by a decision document from the Decision Makers.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make this decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

a) The Filer treats the Preferred Share Exchange Offer as if it were a take-over bid and complies with the requirements of the securities legislation applicable to take-over bids, except that the requirements in Regulation 61-101 (including the minority approval and formal valuation requirements set out therein) shall not apply to the Preferred Share Exchange Offer; and

b) The first trade of any BCE Preferred Shares acquired by holders of Prefco Preferred Shares pursuant to this decision, in any Jurisdiction or Local Jurisdiction, is deemed a distribution or a primary distribution to the public under applicable securities legislation unless the following conditions are met:

(i) A take-over bid circular in a manner that complies with the formal bid requirements of (a) Regulation 62-104 and (b) Part XX of the OSA and Rule 62-504 , relating to the distribution of the BCE Preferred Shares pursuant to the Preferred Share Exchange Offer was filed by the Filer on SEDAR;

(ii) The trade is not a control distribution; and

(iii) The Filer was a reporting issuer on the date the Prefco Preferred Shares were first taken up under the Preferred Share Exchange Offer.

"Lucie J. Roy"
Senior Director, Corporate Finance