Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - relief for seniorofficers and directors of certain "minor" subsidiaries of reporting issuer from the insiderreporting requirements, subject to certain conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c.S.5, as amended, ss. 1(1), 107, 108, 121(2)(a)(ii).

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as amended, PartVIII.

Applicable Ontario Policy Statements

Ontario Securities Commission Policy Statement No. 10.1.


IN THE MATTER OF THE SECURITIES LEGISLATION OFBRITISH COLUMBIA, ALBERTA, MANITOBA, NOVA SCOTIA, ONTARIO,SASKATCHEWAN, NEWFOUNDLAND AND QUÉBEC

AND

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

AND

IN THE MATTER OF
TEMBEC INC.

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of the provinces of British Columbia, Alberta, Manitoba, Nova Scotia,Ontario Saskatchewan, Newfoundland and Québec (the "Jurisdictions") has received anapplication from Tembec Inc. ("the Filer") for a decision under the securities legislation ofthe Jurisdictions (the "Legislation") that, subject to certain conditions, the insider reportingrequirements contained in the Legislation shall not apply to directors and senior officersof certain subsidiaries of the Filer;

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Commission des Valeurs Mobilières du Québec is theprincipal regulator for this application;

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

1. The Filer was incorporated by Letter Patent delivered on July 12, 1972 under PartI of the Companies Act (Québec) and was continued under Part IA of theCompanies Act (Québec) by Certificate of Continuance dated March 18, 1983.

2. The head office of the Filer is located in Montreal, Québec.

3. The Filer is a reporting issuer or equivalent under the Legislation of all of theJurisdictions and is not in default of the requirements contained in Legislation.

4. The authorized capital of the filer consists of an unlimited number of class A votingshares, without par value (the "Common Shares") and an unlimited number of non-voting Class B preferred shares issuable in series without par value, of which 73,881, 392 Class A shares and 1, 250, 000 Serie 3 Class B preferred shares wereoutstanding as at September 30, 1999. The Common Shares are listed and postedfor trading on The Toronto Stock Exchange.

5. The Filer is a paper and forest products company with operations throughoutCanada and Europe. The growth of the Filer was realized primarily as a result ofthe acquisition of its current subsidiaries. Agreements entered into for theacquisition of some of its subsidiaries currently restrict the Filer's ability to wind-upsome of its subsidiaries.

6. The list of companies in the attached appendix (the "Appendix") includes allsubsidiaries (the "Major Subsidiaries") of the Filer that have, as reflected in themost recent annual audited financial statements of the Filer, either:

(i) assets, on a consolidated basis with its subsidiaries, representing 10 percentor more of the consolidated assets of the Filer shown on the balance sheet,or

(ii) revenues, on a consolidated basis with its subsidiaries, representing10 percent or more of the consolidated revenues of the Filer shown on thestatement of income and losses.

7. With the exception of the directors and senior officers of the Filer and of the MajorSubsidiaries, none of the directors and senior officers of any of the subsidiaries ofthe Filer either:

(i) participate in the day to day management or operation of the Filer, or

(ii) receive or have access to, in the ordinary course of business, informationrespecting material facts or material changes with respect to the Filer priorto general disclosure of such material facts or material changes.

8. The Filer undertakes to maintain a list of directors and senior officers exempted bythis Decision (as hereafter defined) and the basis upon which each director andsenior officer comes within the terms of the Decision; to maintain a continuingreview of the facts contained in the representations upon which this Decision ismade; to promptly advise the Decision Makers of any changes in such facts; and,upon the request of any of the Decision Makers or their staff, to provide anyinformation necessary to determine whether a director or senior officer of anysubsidiary of the Filer is or is not exempted by this Decision.

9. the Filer undertakes to promptly advise the Commission des Valeurs Mobilières duQuébec (the "Commision") of the name of every director and senior officer whobecomes, or ceases to be, exempted by this Decision and to provide and updatedlist of directors and senior officers to the Commission annually.

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

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the Jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers under the Legislation is that any personwho is subject to the insider reporting requirements due to the fact that he or she is adirector or senior officer of a subsidiary of the Filer, other than a Major Subsidiary listedin the Appendix, is exempt from the insider reporting requirements with respect to his orher ownership over securities of the Filer, provided that the exemption contained in thisDecision does not apply to a person who:

A. in the ordinary course of business receives notice of information as to material factsor material changes concerning the Filer before the material facts or materialchanges are generally disclosed;

B. becomes a director or senior officer of a Major Subsidiary of the Filer (as listed inthe Appendix) or any company which, after the date hereof, becomes a MajorSubsidiary;

C. is also an insider of the Filer in a capacity other than as a director or senior officerof a subsidiary of the Filer; or

D. is denied the exemptions contained in this Decision by another decision of theDecision Makers.

DATED at Montreal March 14, 2000.

Le directeur général et chef de l'exploitation

"Jacques Labelle"

APPENDIX


The major subsidiaries of Tembec Inc. as disclosed in the Decision Document dated March14, 2000 are:

Spruce Falls Inc.
Tembec Industries Inc.
Crestbrook Forest Industries Ltd.