Isotis S.A. - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Application by Swiss-based life sciences company for relief from the requirement to file interim certificates under Multilateral Instrument 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings (MI 52-109) -- Filer listed on the Swiss Exchange, Euronext and the Toronto Stock Exchange -- Filer is a "foreign private issuer" under the Securities and Exchange Act of 1934 (the 1934 Act) and files annual CEO and CFO certifications relating to its annual report pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (SOX) with the Securities and Exchange Commission (the SEC) -- As a foreign private issuer, Filer not currently required to file quarterly CEO and CFO certifications in the U.S. -- Filer currently exempt from the requirement to prepare and file interim financial statements in Canada pursuant to National Instrument 71-102 -- Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102) -- Relief granted so long as the Filer is not required to prepare, file and deliver interim financial statements under the Legislation, subject to conditions, including compliance with the foreign private issuer requirements in section 302(a) of the Sarbanes-Oxley Act.

Rules cited

Multilateral Instrument 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings.

National Instrument 71-102 -- Continuous Disclosure and Other Exemptions Relating to Foreign Issuers.

June 28, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, ONTARIO AND NEW BRUNSWICK (THE "JURISDICTIONS")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM FOR

EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ISOTIS S.A. (THE "FILER")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") exempting the Filer from the requirement to file interim certificates (the "Interim Certificates") with the Decision Makers under Section 3.1 of Multilateral Instrument 52-109 -- Certification of Disclosure in Issuers' Annual and Interim Filings ("MI 52-109").

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) Ontario is the principal regulator for this application, and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in NI 14-101 - Definitions - have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer was formed under the laws of Switzerland.

2. The Filer's principal office is located at 1 Rue de Sébeillon, 1004, Lausanne, Switzerland.

3. The Filer is a foreign reporting issuer, or the equivalent, in each of the Jurisdictions and, to the best of its knowledge, is currently not in default of any applicable requirements under the securities legislation thereunder.

4. The Filer's common shares are listed on the mainboard of the SWX Swiss Exchange ("SWX"), the Official Market segment of the Stock Market of Euronext Amsterdam NV ("Euronext") and the Toronto Stock Exchange.

5. The common shares of the Filer are registered under Section 12(g) of the Securities and Exchange Act of 1934 (the "1934 Act").

6. During the Filer's last financial year ended December 31, 2004, the volume of trading of its common shares on the Toronto Stock Exchange was 3,101,164, only 6% of the comparative volume of trading of its common shares on Euronext and the SWX.

7. As at April 25, 2005, the Filer had 69,265,881 common shares issued and outstanding, of which 17,165,749, or approximately 24.7%, are held by Canadian residents.

8. The Filer estimates that approximately 16% of its beneficial shareholders are Canadian residents, although the Filer is unable to accurately determine such percentage as the total number of beneficial shareholders of the Filer cannot be accurately determined due to Swiss banking laws and the fact that in Europe the registration of shares is not compulsory.

9. Under National Instrument 71-102 -- Continuous Disclosure and Other Exemptions Relating to Foreign Issuers ("NI 71-102"), the Filer is classified as an "SEC Foreign Issuer".

10. As a result, the certification exemption for foreign issuers in Section 4.2 of MI 52-109 is not available to the Filer.

11. The Filer is subject to continuous disclosure and reporting requirements of the U.S. and is subject to the requirements of the SWX and the Euronext.

12. The Filer files annual CEO and CFO certifications relating to its annual report pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 ("SOX") with the Securities and Exchange Commission (the "SEC") and files such certifications with the Decision Makers as soon as reasonably practicable after they are filed with the SEC.

13. Under Subsection 4.1(3) of MI 52-109, the Filer would be exempt from the requirements to file interim certificates under MI 52-109 if:

(a) it furnishes to the SEC a current report on Form 6-K containing its quarterly financial statements and MD&A;

(b) the Form 6-K is accompanied by signed certificates that are furnished to the SEC in the same form required by U.S. federal securities laws implementing the quarterly report certification requirements in Section 302(a) of SOX; and

(c) the signed certificates relating to the quarterly report filed under cover of the Form 6-K are filed through SEDAR as soon as reasonably practicable after they are furnished to the SEC.

14. As a "foreign private issuer" under the 1934 Act, the Filer furnishes to the SEC a current report on Form 6-K containing the Filer's quarterly financial information.

15. Under current SEC rules implementing certification requirements under Section 302 of SOX, "foreign private issuers" filing summary financial information on Form 6-K are not required to furnish certificates.

16. The Filer therefore cannot avail itself of the exemption in section 4.1(3) of MI 52-109 because there is no form required to be filed under U.S. securities laws.

17. The companion policy to NI 71-102 provides that if an issuer is in compliance with a particular aspect of U.S. federal securities laws, and those laws do not require an issuer to disclose, file or send in any information because the issuer is relying on an exemption from those laws, then an issuer is not required to disclose, file or send any information to rely on an exemption in NI 71-102.

Decision

Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.

The decision of the Decision Makers under the Legislation is that pursuant to Section 4.5 of MI 52-109, the requirements contained in MI 52-109 to file Interim Certificates under Section 3.1 shall not apply to the Filer for so long as:

(a) the Filer is not required to prepare, file and deliver interim financial statements under the Legislation, whether pursuant to exemptive relief or otherwise;

(b) the Filer is in compliance with U.S. federal securities laws implementing the certification requirements in Section 302(a) of SOX applicable to the Filer;

(c) the Filer is in compliance with its disclosure obligations under the 1934 Act;

(d) the Filer's signed certificates filed with the SEC relating to its annual report for each financial year are filed with the Decision Makers as soon as reasonably practicable after they are filed with the SEC; and

(e) the Filer's signed certificates filed with the SEC relating to its quarterly financial statements, if any, are filed with the Decision Makers as soon as reasonably practicable after they are filed with the SEC.