Securities Law & Instruments


Subsection 74(1) -- exemption from prospectus requirement in connection with first trade of shares purchased pursuant to a private placement -- issuer unable to fully comply with conditions of section 2.14 of MI 45-102 as approximately 16.22 % of issuer's shares held by Ontario residents -- exemption conditional on resale occurring over NASDAQ Small Cap Market, Boston Stock Exchange or other market outside of Canada.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5. as am, ss. 53, 74 (1).

Rules Cited

Multilateral Instrument 45-102 -- Resale of Securities.









(Subsection 74(1) of the Act)

UPON the application of Workstream Inc. (Workstream) to the Ontario Securities Commission (the Commission) for a ruling pursuant to subsection 74(1) of the Act that section 53 of the Act does not apply to the first trades of 1,836,750 common shares in the capital of Workstream that were acquired by subscribers in Ontario pursuant to a private placement completed on December 10, 2003;

AND UPON considering the application and the recommendation of the staff of the Commission;

AND UPON Workstream having represented to the Commission that:

1. Workstream was incorporated on May 24, 1996 pursuant to the laws of Canada and its head office is located in Ottawa, Ontario.

2. Workstream is registered with the Securities and Exchange Commission in the United States of America under the Securities Exchange Act of 1934 (the 1934 Act) and is not exempt from the reporting requirements of the 1934 Act pursuant to Rule 12G3-2. Workstream is not in default of any securities legislation in the United States or any other jurisdiction.

3. Workstream is not a reporting issuer in any jurisdiction in Canada.

4. The authorized capital of Workstream consists of an unlimited number of common shares and an unlimited number of Class A preferred shares issuable in series, of which 47,428,717 common shares (the Shares) were issued and outstanding as of January 5, 2004.

5. The Shares are publicly traded on the NASDAQ Small Cap Market and on the Boston Stock Exchange, but are not listed on a Canadian stock exchange.

6. As of January 5, 2004, an aggregate of 7,694,743 Shares (16.22% of the outstanding Shares) were held by residents of Canada. Of these Shares, approximately 3,000,000 are held by one individual. As of December 9, 2004, approximately 9.68% of Workstream's shareholders were resident in Canada.

7. On December 10, 2003, 19 subscribers resident in Ontario (the Subscribers) acquired an aggregate of 1,836,750 Shares (the Placement Shares) in reliance on registration and prospectus exemptions pursuant to the applicable securities laws of Ontario. Five (5) other subscribers who were not residents of Canada also purchased 663,250 Shares under the private placement transaction on December 10, 2003.

8. Any resale of the Placement Shares by the Subscribers is expected to be made on the NASDAQ Small Cap Market or on the Boston Stock Exchange as there is no market for the Shares in Canada and none is expected to develop.

9. In the absence of an order granting exemptive relief, the first trade in Placement Shares by any of the Subscribers will be deemed to be a distribution under the Act unless, among other things, Workstream has been a reporting issuer for four months immediately preceding the trade in one of the jurisdictions set forth in Appendix B to Multilateral Instrument 45-102 -- Resale of Securities (the Resale Rule).

10. Section 2.14 of the Resale Rule cannot be utilized by the Subscribers with respect to a first trade of Placement Shares on the NASDAQ Small Cap Market or on the Boston Stock Exchange because, as at the distribution date of the Placement Shares, residents of Canada owned directly or indirectly more than 10 percent of the outstanding Shares.

UPON the Commission being satisfied that to do so would not be prejudicial to the public interest.

IT IS RULED, pursuant to subsection 74(1) of the Act that section 53 of the Act does not apply to the first trades in the Placement Shares, provided that such first trades are executed through the facilities of the NASDAQ Small Cap Market or the Boston Stock Exchange or on another exchange or market outside Canada.

January 7, 2005.

"Susan Wolburgh Jenah"
"Paul Bates"