Securities Law & Instruments


Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief from theprospectus requirements to permit an issuer to the PREP Procedures under NationalPolicy Statement No. 44 in connection with an initial public offering being conductedconcurrently in the United States. Neither the issuer nor its Class B Non-Voting Sharesmeet the eligibility criteria set out in National Policy Statement No. 44.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c.S.5, as am., s. 147.

Rules Cited

In the Matter of Rule for Shelf Prospectus Offerings and for Pricing Offerings after theProspectus is Receipted.


IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA, SASKATCHEWAN, MANITOBA,ONTARIO, QUÉBEC, NEW BRUNSWICK, PRINCE EDWARD ISLAND, NOVA SCOTIA AND NEWFOUNDLAND

AND

IN THE MATTER OF THE
MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
GT GROUP TELECOM INC.

MRRS DECISION DOCUMENT


WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick,Prince Edward Island, Nova Scotia and Newfoundland (the "Jurisdictions") have receivedan application from GT Group Telecom Inc. (the "Corporation") for a decision pursuant tothe securities legislation of the Jurisdictions (the "Legislation") exempting the Corporationfrom the eligibility criteria set out in Section 4.1 of National Policy No. 44 ("NP 44") andarticles 37.5, 37.6 and 37.7 of the Regulation respecting Securities under the Legislationof Québec (the "Québec Regulation"), thereby permitting the use by the Corporation of thePREP Procedures (as such term is defined in NP 44) and similar procedures under theLegislation of Québec (the "Québec Procedures") in connection with the Corporation'sproposed initial public offering of Class B Non-Voting Shares (the "Offering") as more fullydescribed below;

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

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

1. The Corporation operates a national broadband network, over which it providesInternet high-speed data and voice services to businesses in Canada. Its servicesinclude virtual private networking, web and application hosting, co-location,e-commerce and other value-added Internet services enabled by the public keyinfrastructure capabilities of the Corporation. The Corporation also providestraditional telecommunications products and services, including local area networkextension and enhanced local and long distance voice services.

2. The Corporation was incorporated under the Canada Business Corporations Actand is not a reporting issuer or equivalent under the Legislation.

3. The authorized share capital of the Corporation consists of an unlimited number ofClass A Voting Shares, Class B Non-Voting Shares, First Preference Sharesissuable in series and Second Preference Shares issuable in series, of which as ofFebruary 16, 2000, 18,675,777 Class A Voting Shares, 4,398,569 Class BNon-Voting Shares, 42,500,002 First Preference Shares, Series A and 29,096,097First Preference Shares, Series B are issued and outstanding.

4. The Offering will consist of concurrent offerings of Class B Non-Voting Shares tothe public in Canada and the United States. The Corporation estimates thatapproximately 16,000,000 Class B Non-Voting Shares will be sold in the Offeringfor gross proceeds of approximately US$176 million.

5. The Corporation filed: (i) a preliminary prospectus with the securities regulatoryauthorities of each of the provinces of Canada (each a "SRA" and, collectively, the"SRAs") on February 21, 2000; and (ii) a Form F-1 registration statement (the"Registration Statement") with the United States Securities and ExchangeCommission (the "SEC") on February 18, 2000. The Corporation anticipates thefiling of a (final) prospectus with the SRAs on or about March 10, 2000.

6. There is presently no public market for the Class B Non-Voting Shares, however,the Corporation has applied to The Toronto Stock Exchange to list the Class BNon-Voting Shares for trading and to the National Association of Securities Dealersin the United States to have the Class B Non-Voting Shares quoted on the NasdaqNational Market.

7. In connection with the Offering in the United States, the Corporation plans to usethe procedures permitted by Rule 430A under the Securities Act of 1933 (the "1933Act") which will permit the Corporation to omit certain pricing information in theRegistration Statement until after it has been declared effective by the SEC.

8. Use of the PREP Procedures and the Québec Procedures would permit theCorporation and its underwriters to better co-ordinate the pricing, prospectusdelivery, confirmation of purchase, closing and settlement processes in Canadawith those anticipated to be employed in the United States.

9. Neither the Corporation nor the Class B Non-Voting Shares meet the eligibilitycriteria set forth in NP 44 and article 37.5 of the Québec Regulation which wouldotherwise enable the Corporation to use PREP Procedures and the QuébecProcedures.

AND WHEREAS pursuant to the System, this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS the Decision Makers are of the opinion that it would not beprejudicial to the public interest to make the Decision;

THE DECISION of the Decision Makers under the Legislation is that the Corporationbe and is hereby exempted from the eligibility criteria set out in Section 4.1 of NP 44 andin the Québec Regulations and is permitted to use the PREP Procedures under NP 44 andthe Québec Procedures in connection with the Canadian tranche of the Offering insofaras is necessary to allow the Offering to proceed in the United States in accordance withRule 430A.

March 3rd, 2000.

"Margo Paul"