Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - relief granted to certain vice presidentsof a reporting issuer from the insider reporting requirementssubject to certain conditions as outlined in CSA Staff Notice55-306 - Applications for Relief from the Insider ReportingRequirements by Certain Vice Presidents.

Statutes Cited

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

Regulations Cited

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as am., Part VIII.

Rules Cited

National Instrument 55-101 - Exemption FromCertain Insider Reporting Requirements.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, BRITISH COLUMBIA, MANITOBA,
NEWFOUNDLAND AND LABRADOR, NOVA SCOTIA,
ONTARIO, QUEBEC, AND SASKATCHEWAN

AND

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

AND

IN THE MATTER OF
SHOPPERS DRUG MART CORPORATION

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Alberta, British Columbia, Manitoba, Newfoundland and Labrador,Nova Scotia, Ontario, Quebec and Saskatchewan (collectively,the "Jurisdictions") has received an application fromShoppers Drug Mart Corporation ("Shoppers") for adecision pursuant to the securities legislation of the Jurisdictions(the "Legislation") that the requirement containedin the Legislation to file insider reports shall not apply tocertain individuals who are insiders of Shoppers by reason ofhaving the title Vice President;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS Shoppers has represented to the DecisionMakers that:

1. Shoppers is a corporation organized and subsistingunder the laws of New Brunswick with its head office locatedin North York, Ontario;

2. Shoppers is a leading Canadian drug storegroup. Shoppers' business includes the licensing of retail operationsconsisting of over 820 drug stores;

3. Shoppers is a reporting issuer (or equivalent)in each province and territory of Canada and its common sharesare listed on the Toronto Stock Exchange;

4. Shoppers is not in default of any requirementsunder the Legislation;

5. Currently, Shoppers has ten directors (oneof whom is also the Chairman and Chief Executive Officer), fiveExecutive Vice Presidents, 13 Senior Vice Presidents and 33Vice Presidents for a total of 61 persons who are insiders ofShoppers by reason of being a director or officer (the "Insiders");

6. None of the Insiders is exempt from the insiderreporting requirements contained in the Legislation by reasonof an existing exemption such as National Instrument 55-101("NI55-101") or a previous decision or order;

7. Shoppers has developed a corporate disclosurepolicy (the "Disclosure Policy") and a policy andprocedures governing insider trading (the "Insider TradingPolicy") that apply to all of the Insiders;

8. The objective of the Disclosure Policy isto ensure that communications to the investing public aboutShoppers are: timely, factual, accurate and broadly disseminatedin accordance with all applicable legal and regulatory requirements;

9. Shoppers has developed the Insider TradingPolicy to ensure that its directors, officers and designatedemployees who are "insiders" under the Legislationare aware of their responsibilities under the Legislation andto assist them in complying with the Legislation;

10. The Disclosure Policy and Insider TradingPolicy also apply to other employees of Shoppers who have knowledgeof material undisclosed information. Shoppers has also establisheda disclosure policy committee (the "Disclosure Committee")and a compliance committee (the "Compliance Committee")to oversee administration of the policies;

11. Under the Disclosure Policy and the InsiderTrading Policy, the Insiders and other employees with knowledgeof material undisclosed information may not trade in securitiesof Shoppers. In addition, the Insiders may not trade in securitiesof Shoppers during "black-out" periods around thepreparation of financial results or any other "black-out"period as determined by the Disclosure Committee. Outside ofthe "black-out" periods, the Insiders may only tradein securities of Shoppers upon the prior approval of the GeneralCounsel, the Chief Financial Officer (the "CFO") orthe Investor Relations Officer;

12. The Compliance Committee (comprised of theChief Executive Officer, CFO, General Counsel, Investor RelationsOfficer and Senior Law Clerk) considered the job requirementsand principal functions of the Insiders to determine which ofthem met the definition of "nominal vice president"contained in Canadian Securities Administrators Staff Notice55-306 (the "Staff Notice") and has compiled a listof those Insiders who, in the opinion of the Compliance Committee,meet the criteria set out in the Staff Notice (the "ExemptedVPs");

13. Each of the Exempted VPs:

(a) is a vice president of Shoppers;

(b) is not in charge of a principal businessunit, division or function of Shoppers or a "major subsidiary"of Shoppers (as that term is defined in NI 55-101);

(c) does not in the ordinary course receiveor have access to information regarding material facts or materialchanges concerning Shoppers before the material facts or materialchanges are generally disclosed; and

(d) is not an insider of Shoppers in any capacityother than as a vice president;

14. The Compliance Committee will assess anyfuture employee of Shoppers who has the title of Vice Presidenton the same basis as set out above, and will re-assess all ExemptedVPs who experience a change in job requirements or functions,to determine if such individuals meet, or continue to meet,the definition of "nominal vice president" containedin the Staff Notice;

15. If an individual who is designated as anExempt VP no longer satisfies the definition of "nominalvice president" contained in the Staff Notice, the ComplianceCommittee will ensure that the General Counsel, Investor RelationsOfficer and CFO will not provide prior approval for the tradingin securities of Shoppers to such individual without informinghim or her of the renewed obligation to file an insider reportin respect of such trades;

16. Shoppers has filed with the Decision Makersin connection with this application a copy of the Insider TradingPolicy, the Disclosure Policy, and the list of Exempted VPs.

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makersunder the Legislation is that the requirement contained in theLegislation to file insider reports shall not apply to the ExemptedVPs or any other employee of Shoppers who hereafter is giventhe title Vice President provided that:

(a) they satisfy the definition of "nominalvice president" contained in the Staff Notice;

(b) Shoppers prepares and maintains a list ofall individuals who propose to rely on the exemption granted,submits the list on an annual basis to the board of directorsfor approval, and files the list with the Decision Makers;

(c) Shoppers files with the Decision Makersa copy of its internal policies and procedures relating to monitoringand restricting the trading activities of its insiders and otherpersons whose trading activities are restricted by Shoppers;and

(d) the relief granted will cease to be effectiveon the date when NI 55-101 is amended.

June 3, 2002.

"Harold P. Hands"      "Robert W. Korthals"