Securities Law & Instruments

Headnote

Mutual Reliance Review Systemfor Exemptive Relief Applications - amended issuer bid madethrough the facilities of the NYSE by U.S. offeror with approximately540 registered holders in Canada holding 12.5% of the totaloutstanding securities subject to the bid - Offeror exempt fromformal issuer bid requirements, provided that in each of theJurisdictions the issuer bid is made in compliance with theapplicable U.S. securities laws.

Applicable Ontario StatutoryProvisions

Securities Act, R.S.O. 1990,c. S.5, as am., ss. 93(3)(e), 95, 96, 97, 98, 100 and 104(2)(c).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO, QUEBEC AND MANITOBA,

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

BIOVAIL CORPORATION

 

MRRS DECISION DOCUMENT

WHEREAS the local securitiesregulatory authority or regulator (the "Decision Maker")in each of Ontario, Quebec and Manitoba (collectively, the "Jurisdictions")has received an application from Biovail Corporation (the "Company")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that in connection with the proposedpurchase by the Company of up to 12,862,800 of its issued andoutstanding common shares pursuant to an issuer bid, the Companybe exempt from the provisions in the Legislation relating toissuer bids (the "Issuer Bid Requirements") insofaras purchases under the issuer bid are made by the Company throughthe facilities of the New York Stock Exchange (the "NYSE");

AND WHEREAS under theMutual Reliance Review System for Exemptive Relief Applications(the "System"), the Ontario Securities Commissionis the principal regulator for this application;

AND WHEREAS the Companyhas represented to the Decision Makers that:

1. The Company is a corporationamalgamated under the Business Corporations Act (Ontario)and its head office is located in Ontario.

2. The Company is a reportingissuer or its equivalent in each of the provinces of Canada(where that concept exists), and is not in default of itsreporting issuer obligations under the Legislation.

3. The Company is also a registrantwith the Securities Exchange Commission in the United States(the "SEC") and is subject to the requirements ofthe United States Securities Act of 1934 (the "1934Act").

4. The authorized capitalof the Company consists of an unlimited number of common shares(the "Shares"), of which, as at June 13, 2002, approximately150,162,417 Shares were issued and outstanding.

5. The Shares are listed onthe Toronto Stock Exchange (the "TSX") and the NYSEunder the trading symbol "BVF". Approximately 75%of the Shares that have traded to date in 2002 have tradedthrough the NYSE, up from 72% in 2001. The remainder of Sharesin those periods traded through the TSX.

6. Based on information providedby the Company's transfer agent, as at June 13, 2002, therewere approximately 540 registered holders of Shares in Canada,holding in the aggregate approximately 18,761,666 Shares,which represents approximately 12.5% of the total issued andoutstanding Shares. This information indicates that therewere 386 registered holders in Ontario holding approximately12.5% of the total issued and outstanding Shares and 99 holdersin Manitoba holding approximately 0.0009% of the total issuedand outstanding Shares. This data further indicates that therewere fewer than 50 registered holders, if any, resident inthe provinces of British Columbia, Alberta, Saskatchewan,New Brunswick, Newfoundland and Labrador, Nova Scotia, andPrince Edward Island, and in the Yukon Territory, the NorthwestTerritories, and Nunavut. According to a report obtained fromIndependent Investors Communications Corporation, there weremore than 50 beneficial holders of Shares in Quebec holdingapproximately 3.5% of the issued and outstanding Shares.

7. On February 14, 2002, theCompany commenced a normal course issuer bid pursuant to whichthe Company was able to repurchase up to 5% of the issuedand outstanding Shares. As at May 31, 2002, the Company hadrepurchased 7,791,400 Shares under that bid through the facilitiesof the NYSE. These repurchases were exempt from the IssuerBid Requirements under the "normal course issuer bid"exemption in the Legislation.

8. On May 31, 2002, the Company'snormal course issuer bid was amended to provide that the Companycould repurchase up to 10% of the public float, or an additional5,071,400 Shares, through the facilities of the TSX, for atotal of 12,862,800 Shares (representing approximately 8%of the total issued and outstanding Shares). The amended bidis currently limited to the facilities of the TSX and is exemptfrom the Issuer Bid Requirements under the "recognizedstock exchange" exemption in the Legislation.

9. As a much higher volumeof Shares trade through the NYSE, the Company wishes to havethe ability to continue to repurchase Shares through the facilitiesof the NYSE and wishes to extend the amended bid to the facilitiesof the NYSE (the "Proposed Bid").

10. The Proposed Bid willbe completed in compliance with the 1934 Act, the UnitedStates Securities Act of 1933, and the rules of the SECmade pursuant to such statutes (collectively, the "ApplicableU.S. Securities Laws"). All purchases made through theNYSE will be made through only one broker in any one day,will not be made at the opening of the market or within onehalf hour of the close, will not be made at prices higherthan the highest published independent bid or last reportedindependent sale price on the NYSE (whichever is higher),and will be in an amount that does not exceed, in any oneday, 25% of the average daily trading volume over the pastfour weeks. NYSE rules also require that the NYSE be notifiedwithin 10 days of the end of a quarter of repurchases of sharesby listed companies and promptly of any repurchases in excessof the market price.

11. The Company cannot relyon the "recognized stock exchange" exemption fromthe Issuer Bid Requirements in the Legislation for the ProposedBid because the NYSE is not recognized for the purpose ofthis exemption.

12. The Company cannot relyon the "normal course issuer bid" exemption fromthe Issuer Bid Requirements in the Legislation because theCompany is proposing to repurchase more than 5% of the issuedand outstanding common Shares within a 12 month period.

13. The Company cannot relyon the "de minimis" exemption from the Issuer BidRequirements in the Legislation because there are more than50 registered holders of Shares in each of Ontario and Manitobaand, in the case of Quebec, there are more than 50 beneficialholders of Shares.

AND WHEREAS pursuantto the System, this MRRS Decision Document evidences the decisionof each Decision Maker (collectively, the "Decision");

AND WHEREAS each of theDecision Makers is satisfied that the test contained in theLegislation that provides the Decision Maker with the jurisdictionto make the Decision has been met;

THE DECISION of the DecisionMakers under the Legislation is that the Proposed Bid is exemptfrom the Issuer Bid Requirements, provided that the ProposedBid is made in compliance with the requirements of ApplicableU.S. Securities Laws.

July 3, 2002.

"Robert W. Korthals"                    "HaroldP. Hands"