Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications.

The issuer established a reinvestment plan which allows certain holders of Common Shares or Non-Voting Shares to acquire Non-Voting Shares through the reinvestment of cash dividends paid on their respective shareholdings. The exemption in section 2.2 of National Instrument 45-106 Prospectus and Registration Exemptions is unavailable for the reinvestment of dividends on the Common Shares in Non-Voting Shares as the exemption only refers to the purchase of securities that are of the same class or series as the securities to which the dividends are attributable. Trades in Non-Voting Shares under the plan by the issuer or the plan agent to plan participants who are purchasing the Non-Voting Shares using dividends paid in respect of their Common Shares are exempted from the dealer registration requirement and the prospectus requirement, subject to conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74.

Instruments Cited

National Instrument 45-106 Prospectus and Registration Exemptions, s. 2.2.

November 28, 2005

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO AND THE YUKON TERRITORY

(the "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

TELUS CORPORATION (the "Filer")

 

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the "Decision Makers") in each of the Jurisdictions has received an application from the Filer, under the securities legislation of the Jurisdictions (the "Legislation"), for the following decisions in respect of certain trades that may be made by the Filer or its plan agent (the "Plan Agent"), pursuant to the Filer's Dividend Reinvestment and Share Purchase Plan, as amended on October 24, 2004 (the "Plan"), that are related to the acquisition of non-voting shares, including fractions, of the Filer ("Non-Voting Shares") by persons or companies ("Plan Participants") that participate in the Plan:

A decision (the "Registration Acquisition Relief") that the dealer registration requirement does not apply to:

(a) trades in Non-Voting Shares made by the Filer, or by the Plan Agent, to a Plan Participant, in connection with the purchase of the Non-Voting Shares by the Plan Participant under the Plan, using dividends or distributions out of earnings, surplus, capital or other sources, payable in respect of common shares of the Filer ("Common Shares") that are held by the Plan Participant under the Plan, to purchase the Non-Voting Shares; or

(b) trades in Non-Voting Shares made by the Filer or Plan Agent to a Plan Participant, in connection with the purchase of the Non-Voting Shares by the Plan Participant under the Plan, using an optional cash payment under the Plan ("Optional Cash Payment"), to purchase the Non-Voting Shares, where the Plan Participant holds Common Shares, but not Non-Voting Shares, under the Plan.

A decision (the "Prospectus Acquisition Relief") that the prospectus requirement does not apply to a distribution of Non-Voting Shares in the circumstance referred to in paragraphs (a) or (b), above.

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) the Ontario Securities Commission has been chosen as the principal regulator for this application; and

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

Representations

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

1. The Filer was incorporated under the Company Act (British Columbia) on October 26, 1998 under the name BCT.TELUS Communications Inc. ("BCT"). On January 31, 1999, pursuant to a court-approved plan of arrangement under the Canada Business Corporations Act among BCT, BC TELECOM Inc. ("BC TELECOM") and TELUS Corporation ("TC"), BCT acquired all of the shares of each of BC TELECOM and TC in exchange for common shares and non-voting shares of BCT and BC TELECOM was dissolved. On May 3, 2000, BCT changed its name to TELUS Corporation and in February 2005, the Filer transitioned under the Business Corporations Act (British Columbia), successor to the Company Act (British Columbia).

2. The Filer is a reporting issuer in each of the provinces and territories of Canada (the "Reporting Jurisdictions") and, to the knowledge of the Filer, is not in default of any requirement under the securities legislation of each Reporting Jurisdiction.

3. The Filer is a telecommunications company which provides its communications services through two material subsidiaries: TELUS Communications Inc. ("TCI") and TELE-MOBILE COMPANY ("TELUS Mobility"). The Filer owns 100 percent of the voting shares in TCI directly, and 100 percent of the partnership interests in TELUS Mobility indirectly.

4. The authorized capital of the Filer consists of 4,000,000,000 shares, divided into: (i) 1,000,000,000 common shares without par value ("Common Shares"); (ii) 1,000,000,000 non-voting shares without par value ("Non-Voting Shares"); (iii) 1,000,000,000 first preferred shares without par value; and (iv) 1,000,000,000 second preferred shares without par value.

5. The Common Shares and Non-Voting Shares are listed on the Toronto Stock Exchange under "T" and "T.NV", respectively, and the Non-Voting Shares are listed on the New York Stock Exchange under the symbol "TU".

6. Each of TCI and TELUS Mobility (the "Canadian Carriers") is required by the Telecommunications Act (Canada) (the "Telecommunications Act") and the regulations thereunder to be a Canadian-owned and controlled corporation incorporated or continued under the laws of Canada or a province of Canada, or, in the case of the TELUS Mobility partnership, each of the partners must meet these requirements.

7. Substantially the same rules apply to TELUS Mobility as a partnership under the Radiocommunication Act (Canada) (the "Radiocommunication Act") and to TCI as a Broadcasting Distribution Undertaking pursuant to the Direction to the CRTC (Ineligibility of Non-Canadians) given under the Broadcasting Act (Canada) (the "Broadcasting Act").

8. Each of the Canadian Carriers is considered, under the Telecommunications Act, to be Canadian-owned and controlled as long as: (a) not less than 80 per cent of the members of its board of directors are individual Canadians; (b) Canadians beneficially own not less than 80 per cent of its issued and outstanding voting shares; and (c) it is not otherwise controlled in fact by persons who are not Canadians.

9. Each of the Telecommunications Act, Radiocommunication Act and Broadcasting Act also provide that, not less than 66-2/3 per cent of the issued and outstanding voting shares of that company must be owned by Canadians and that such company must not otherwise be controlled in fact by non-Canadians. Accordingly, not less than 66-2/3 per cent of the issued and outstanding voting shares of the Filer must be owned by Canadians and the Filer must not otherwise be controlled in fact by non-Canadians.

10. To the best of the Filer's knowledge, as at November 9, 2005, Canadians beneficially own and control in the aggregate not less than 66-2/3 per cent of the issued and outstanding Common Shares and the Filer is not otherwise controlled in fact by non-Canadians.

11. The Government of Canada is currently reviewing proposals for changes to the current foreign ownership restrictions; however, no changes to the current restrictions are anticipated in the near term.

12. The current Plan Agent for the Filer is Computershare Trust Company of Canada.

13. The Plan allows eligible holders of Common Shares or Non-Voting Shares to acquire Non-Voting Shares through reinvestment of the cash dividends paid on their respective shareholdings.

14. Plan Participants also have the option to make cash payments to purchase additional Non-Voting Shares. Cash payments may not be less than $100 per transaction nor greater than $20,000 per calendar year per Plan Participant.

15. The Plan provides the Filer with the option of electing whether the Non-Voting Shares that are to be acquired by Plan Participants, whether in respect of the reinvestment of dividends or the making of optional cash payments, are to be either purchased in the open market by the Plan Agent or issued by the Filer from treasury.

16. Although the current policy of the Plan (as per an amendment to the Plan on October 24, 2004) is that Non-Voting Shares to be delivered to Plan Participants under the Plan are to be acquired in the open market by the Plan Agent, the Filer does retain its option under the Plan to elect to issue those securities from treasury.

Decision

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

The decision of the Decision Makers under the Legislation is that the Registration Acquisition Relief and Prospectus Acquisition Relief are granted, provided that:

(1) in the case of the Registration Acquisition Relief,

1. at the time of the trade, the Plan is made available to every security holder in Canada to which the corresponding dividend or distribution is available;

2. at the time of the trade, the Filer is not an investment fund;

3. for each Jurisdiction, this decision will terminate on the earlier of:

(i) 90 days after the coming into force of any rule, other regulation or blanket order or ruling under the Legislation of the Jurisdiction that amends section 2.2 of National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106") or provides an alternative exemption;

(ii) December 31, 2008; and

4. for any trade that relates to the purchase of Non-Voting Shares pursuant to an optional cash payment,

(i) at the time of the trade, the Non-Voting Shares trade on a marketplace; and

(ii) the aggregate number of securities issued under any Optional Cash Payment under the Plan (whether or not under this Decision) must not exceed, in any financial year of the Filer during which the trade takes place, 2% of the issued and outstanding securities of the class to which the Plan relates as at the beginning of the financial year; and

(2) in the case of the Prospectus Acquisition Relief,

(a) at the time of the trade, the Plan is made available to every security holder in Canada to which the corresponding dividend or distribution is available;

(b) at the time of the trade, the Filer is not an investment fund;

(c) the first trade in any Non-Voting Shares issued by the Filer under the Plan to holders of Common Shares pursuant to this decision will be a distribution or primary distribution to the public unless the conditions set out in subsection 2.6(3) of National Instrument 45-102 Resale of Securities are satisfied;

(d) for any trade that relates to the purchase of Non-Voting Shares pursuant to an optional cash payment,

(i) at the time of the trade, the Non-Voting Shares trade on a marketplace; and

(ii) the aggregate number of securities issued under any Optional Cash Payment under the Plan (whether or not under this Decision) must not exceed, in any financial year of the Filer during which the trade takes place, 2% of the issued and outstanding securities of the class to which the Plan relates as at the beginning of the financial year; and

(e) for each Jurisdiction, this decision will terminate on the earlier of:

(i) 90 days after the coming into force of any rule, other regulation or blanket order or ruling under the Legislation of the Jurisdiction that amends section 2.2 of NI 45-106 or provides an alternate exemption; and

(ii) December 31, 2008.

"Robert W. Davis, FCA"
Commissioner
Ontario Securities Commission
 
"Paul K. Bates"
Commissioner
Ontario Securities Commission