Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Issuer has only one security holder -issuer deemed to have ceased being a reporting issuer.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.s. 83.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO AND ALBERTA

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANARGO OIL & GAS INC.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in theProvinces of Ontario and Alberta (the "Jurisdictions")has received an application from CanArgo Oil & Gas Inc.(the "Company") for a decision pursuant to the securitieslegislation of each of the Jurisdictions (the "Legislation")that the Company be deemed to have ceased to be a reportingissuer under the Legislation;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission (the "OSC") is theprincipal regulator for this application;

AND WHEREAS the Company has representedto the Decision Makers that:

1. The Company was formed under the name MoneyWorks Inc. by Articles of Amalgamation dated January 1, 1994under the laws of the Province of Alberta. Effective July1, 1997, the Company acquired all of the shares of CanArgoLtd. and on July 2, 1997 changed its name to CanArgo EnergyInc. The Company was continued under the laws of the Provinceof Ontario on July 9, 1998 under the name CanArgo Energy Ltd.The Company changed its name to CanArgo Oil & Gas Inc.effective July 15, 1998.

2. The registered and head office of the Companyis located at Suite 2500, BCE Place, 181 Bay Street, Toronto,Ontario, M5J 2T7.

3. The Company is a reporting issuer in eachJurisdiction.

4. The Company is not in default of any requirementsof the Legislation.

5. The authorized share capital of the Companyconsists of (i) an unlimited number of common shares ("CommonShares"); (ii) an unlimited number of first preferredshares ("First Preferred Shares"); (iii) an unlimitednumber of second preferred shares ("Second PreferredShares"); and (iv) 23,782,138 exchangeable shares ("ExchangeableShares").

6. There are currently 100 Common Shares outstanding.At July 31, 2002, there were 65,851 Exchangeable Shares outstanding.There are no First Preferred Shares or Second Preferred Sharesoutstanding.

7. Other than the Common Shares and the ExchangeableShares, no other securities of the Company, including debtsecurities, are currently issued and outstanding.

8. No securities of the Company are currentlylisted on any exchange or quoted on any market.

9. CanArgo Energy Corporation ("CanArgo")is a corporation incorporated under the laws of the Stateof Delaware.

10. CanArgo is subject to the reporting requirementsof the United States Securities Exchange Act of 1934 (the"Exchange Act").

11. On July 15, 1998, CanArgo acquired allof the Common Shares under the terms of a plan of arrangement(the Arrangement") pursuant to section 182 of the BusinessCorporations Act (Ontario). Pursuant to the Arrangement,common shareholders of the Company received exchangeable sharesof the Company (the "Exchangeable Shares"). TheExchangeable Shares were not listed on any exchange in Canada.Upon completion of the Arrangement, CanArgo held all of theoutstanding Common Shares, the Company became a subsidiaryof CanArgo, the Company changed its name from CanArgo EnergyLtd. to CanArgo Oil & Gas Inc. and CanArgo changed itsname from Fountain Oil Incorporated to CanArgo Energy Corporation.

12. Pursuant to a mutual reliance review systemdecision document In the Matter of CanArgo Energy Inc.and Fountain Oil Incorporated (1998), 21 OSCB 4625 (the"Decision Document") previously issued by the DecisionMaker in each of the Jurisdictions, the Company was granted,amongst other things, exemptive relief from (i) the prospectusand registration requirements of the legislation in respectof certain trades in the Exchangeable Shares and CanArgo commonstock (the "CanArgo Common Stock") and (ii) certaincontinuous disclosure requirements of the Legislation, subjectto certain conditions. Pursuant to the Decision Document,the Company's filing requirements (aside from material changereports and press releases relating to the Company alone)are to be satisfied through CanArgo's filing with the DecisionMaker in each of the Jurisdictions copies of all documentsrequired to be filed by CanArgo with the United States Securitiesand Exchange Commission under the Exchange Act.

13. The Exchangeable Shares were redeemableon the earlier of (i) January 30, 2004 or, (ii) a date determinedby the board of directors of the Company if the number ofExchangeable Shares outstanding was less than 10 percent ofthe number issued at the time of the Arrangement. Upon suchredemption by the Company, each shareholder was entitled toreceive from the Company for each Exchangeable Share redeemedan amount equal to the market price of a share of CanArgoCommon Stock which was to be satisfied by the delivery onbehalf of the Company of one share of CanArgo Common Stock,plus an additional amount equivalent to the full amount ofall declared and unpaid dividends thereon.

14. Pursuant to a voting support and exchangetrust agreement dated as of July 15, 1998 among the Company,CanArgo and the Montreal Trust Company of Canada, CanArgowas granted a call right to purchase all of the ExchangeableShares (the "Call Right") in the event of the redemptionof the Exchangeable Shares, subject to certain conditionsbeing met. As a result of the exercise by CanArgo of the CallRight, effective May 23, 2002, CanArgo became the sole holderof all of the Exchangeable Shares.

15. As a result of the completion of the Arrangementand the exercise of the Call Right by CanArgo, all of theoutstanding Common Shares and Exchangeable Shares are heldby CanArgo. Therefore, CanArgo is now the sole securityholderof the Company.

16. The Company does not presently intendto seek public financing by way of an offering of its securities.

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

AND WHEREAS each Decision Maker is ofthe opinion 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 Makers underthe Legislation is that the Company is deemed to have ceasedto be a reporting issuer under the Legislation.

August 14, 2002.

"John Hughes"