Royal Group Technologies Limited

Headnote

Issuer bids resulting from a reorganization involving issuer and a 6.7% shareholder -- purpose of reorganization is to allow shareholder to achieve certain tax planning objectives relating to its holdings in the issuer -- after reorganization, the issuer will have the same number of shares issued and outstanding, and each shareholder will have the same number of shares and same relative ownership that they owned prior to the reorganization -- shareholder to indemnify and reimburse issuer for costs and liabilities associated with reorganization -- no adverse economic impact on or prejudice to issuer or public shareholders -- Relief from issuer bid requirements granted under clause 104(2)(c) of the Securities Act (Ontario)

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 95, 96, 97, 98, 100, 102, 104(2)(c).

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, C. S-5, AS AMENDED

AND

IN THE MATTER OF

ROYAL GROUP TECHNOLOGIES LIMITED

ORDER

WHEREAS the Ontario Securities Commission (the "Commission") has received an application (the "Application") from Royal Group Technologies Limited ("Royal Group") for an order of the Commission pursuant to subsection 104(2)(c) of the Securities Act (Ontario) (the "Act") that Royal Group be exempt from the issuer bid requirements set forth in sections 95, 96, 97, 98, 100 and 102 of the Act and the regulations made thereunder (the "Issuer Bid Requirements") in connection with certain indirect acquisitions by Royal Group of its common shares pursuant to a proposed transaction (the "Transaction") involving De Meneghi Holdings Limited ("DHL");

AND WHEREAS considering the Application and the recommendation of staff of the Commission;

AND WHEREAS Royal Group has represented to the Commission that:

1. Royal Group is a corporation existing under the Canada Business Corporations Act (the "CBCA") with its registered and principal office located in Woodbridge, Ontario. Royal Group is a reporting issuer or its equivalent under the securities legislation of each of the provinces of Canada. The common shares of Royal Group are listed on the Toronto Stock Exchange (the "TSX") and the New York Stock Exchange (the "NYSE").

2. At the annual and special meeting (the "Meeting") of shareholders of Royal Group held on May 25, 2005, Royal Group received the requisite shareholder approval to, among other things, amend its articles to (i) permit an increase in the stated capital of only its multiple voting shares (the "Multiple Voting Shares"), (ii) remove the Multiple Voting Shares and the subordinate voting shares of Royal Group (the "Subordinate Voting Shares") as well as the rights, privileges, restrictions and conditions attaching thereto, and (iii) to change all of the outstanding Subordinate Voting Shares into common shares of Royal Group (collectively the "Amendments"). In addition, the holder of all outstanding Multiple Voting Shares agreed to convert such shares into Subordinate Voting Shares after the stated capital of the Multiple Voting Shares was increased but prior to the effectiveness of the amendment changing the Subordinate Voting Shares to common shares. A description of the Amendments is set out in the management information circular (the "Circular") of Royal Group dated April 22, 2005 in connection with the Meeting.

3. The increase to the stated capital account of the Multiple Voting Shares increased the adjusted cost base of such shares for Canadian income tax purposes. Royal Group indicated in the Circular that holders of Subordinate Voting Shares would have the opportunity, at their own cost, to effect an increase in the stated capital of their Subordinate Voting Shares by making arrangements to do so with Royal Group.

4. The Amendment changing the Subordinate Voting Shares to common shares of Royal Group was effective on June 27, 2005. Royal Group is authorized to issue an unlimited number of common shares (the "Royal Shares"), of which 93,444,502 Royal Shares were outstanding on May 17, 2006.

5. DHL is a corporation existing under the CBCA and is not a reporting issuer under the Act. The registered office of DHL is located in Concord, Ontario.

6. As of May 17, 2006, DHL owned 6,244,344 Royal Shares, representing approximately 6.7% of the then outstanding Royal Shares.

7. The purpose of the Transaction is to enable DHL to achieve certain tax planning objectives relating to its holdings of the Royal Shares.

8. The proposed Transaction entails the following principal steps:

(a) DHL will incorporate two corporations ("Holdco1" and "Holdco2" respectively) under the CBCA, with the registered office of each of such corporation located in Concord, Ontario. The authorized capital of Holdco1 will consist of an unlimited number of common shares and an unlimited number of class A special shares. The authorized capital of Holdco2 will consist of an unlimited number of common shares.

(b) DHL will transfer (the "1^st Transfer") all Royal Shares that it currently owns (the "Existing Royal Shares") to Holdco1 in exchange for common shares of Holdco1 (the "Holdco1 Common Shares"). The 1^st Transfer will be effected in accordance with section 85(1) of the Income Tax Act (Canada) (the "Tax Act"). Prior to the 1^st Transfer, Holdco1 will have no material assets and Holdco1 will have no liabilities at any time.

(c) Holdco1 will declare and pay a series of stock dividends, payable in newly issued class A special shares of Holdco1 (the "Holdco1 Special Shares"), to DHL.

(d) DHL will transfer (the "2^nd Transfer") the Holdco1 Special Shares to Holdco2 in exchange for common shares of Holdco2. The 2^nd Transfer will be effected in accordance with section 85(1) of the Tax Act. Prior to the 2^nd Transfer, Holdco2 will have no material assets and Holdco2 will have no liabilities at any time.

(e) Following the 1^st Transfer and the 2^nd Transfer, DHL will transfer all of the Holdco1 Common Shares to Royal Group in exchange for a number of Royal Shares issued from treasury by Royal Group (the "New DHL Royal Shares"). Such transfer will be effected in accordance with section 85(1) of the Tax Act.

(f) Holdco2 will transfer all of the Holdco1 Special Shares to Royal Group in exchange for a certain number of Royal Shares issued from treasury by Royal Group (the "New Holdco2 Royal Shares" and together with the New DHL Royal Shares referred to as the "New Royal Shares"). Such transfer will be effected in accordance with section 85(1) of the Tax Act.

(g) The number of New DHL Royal Shares and the number of the New Holdco2 Royal Shares will together equal the number of Existing Royal Shares.

(h) Immediately following the acquisition by Royal Group of the Holdco1 Common Shares and the Holdco1 Special Shares, Holdco1 will be liquidated or wound-up pursuant to the provisions of the CBCA into Royal Group (the "Holdco1 Wind-up") and as a consequence thereof, the Existing Royal Shares held by Holdco1 will be acquired and cancelled.

9. With respect to the issue of the New DHL Royal Shares to DHL and the New Holdco2 Royal Shares to Holdco2 as set out in paragraphs 8(e) and (f) above, and conditional on receipt of the relief requested herein, Royal Group intends to rely on the prospectus and registration exemptions set out in section 2.16 of NI 45-106 relating to issuer bids.

10. The Transaction will have no net effect on the aggregate number and relative percentage of Royal Shares and the rights and benefits in respect of such shares beneficially owned by each of DHL and the public shareholders of Royal Group (the "Public Shareholders").

11. DHL and Holdco2 will be required to enter into a share exchange agreement with Royal Group, in a form and substance satisfactory to Royal Group.

12. All costs and expenses incurred by Royal Group in connection with the Transaction will be paid for by DHL. DHL will indemnify Royal Group, the Public Shareholders from time to time, and the present and future directors and officers of Royal Group from any losses or liabilities which may be incurred by them as a result of the Transaction.

13. After giving effect to the Transaction, Royal Group should not, for Canadian federal and provincial income tax purposes:

(i) realize any income or capital gain;

(ii) have any reduction in the cost of any of its assets; and

(iii) experience an increase in its taxable capital.

14. The Transaction is subject to (i) approval of the steps to be carried out by Royal Group in connection with the Transaction by the directors of Royal Group, (ii) acceptance of the issue and listing of the Royal Shares to be issued in connection with the Transaction by the TSX and the NYSE and (iii) receipt of the relief in this Order.

15. The agreement of Royal Group to acquire all of the Holdco1 Common Shares from DHL and to acquire the Holdco1 Special Shares from Holdco2 (together, the "Holdco1 Offers") will constitute an "issuer bid" within the meaning of the Act and will be subject to the Issuer Bid Requirements as an offer by Royal Group to acquire the Existing Royal Shares owned by Holdco1.

16. The Holdco1 Windup resulting in the cancellation of the Existing Royal Shares (the "Windup Offer") will constitute an issuer bid within the meaning of the Act and will be subject to the Issuer Bid Requirements.

AND WHEREAS the Commission being satisfied that to so order would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 104(2)(c) of the Act that Royal Group is exempt from the Issuer Bid Requirements in connection with the Transaction.