Securities Law & Instruments

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 52-107, s. 9.1 Acceptable Accounting Principles, Auditing Standards and Reporting Currency -- A reporting issuer wants to early adopt IFRS for purposes of preparing its financial statements -- The issuer has assessed the readiness of its staff, board, audit committee, auditors and investors; the issuer will provide detailed disclosure regarding its early adoption of IFRS as set out in CSA Staff Notice 52-320 in a news release or in restated and re-filed MD&A for its most recent interim period to be disseminated or re-filed within seven days of the decision; the issuer will restate and re-file any financial statements prepared in accordance with Canadian GAAP for interim periods for the fiscal year in which they intend to adopt IFRS together with related interim MD&A and certificates required by NI 52-109.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 9.1.

[Translation]

December 1, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

QUÉBEC AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

THERATECHNOLOGIES INC.

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) 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 in section 3.1 of Regulation 52-107 respecting Acceptable Accounting Principles, Auditing Standards and Reporting Currency (Regulation 52-107) that financial statements be prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) (the Exemption Sought) in order that the Filer may prepare financial statements for periods beginning on or after December 1, 2009 in accordance with in Part I of the Handbook of the Canadian Institute of Chartered Accountants, that is International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IFRS-IASB).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for this application,

(b) the Filer has provided notice that section 4.7(1) of Regulation 11-102 respecting Passport System (Regulation 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador (the Passport Jurisdictions), and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Filer is incorporated under Part IA of the Companies Act (Québec).

2. The head office of the Filer is located at 2310, boulevard Alfred-Nobel, Montréal, Québec, H4S 2B4.

3. The Filer is a Canadian biopharmaceutical company that discovers and develops innovative therapeutic products, with an emphasis on peptides, for commercialization.

4. The Filer is a reporting issuer in the Jurisdictions and each of the Passport Jurisdictions.

5. The Filer is not in default of its reporting issuer obligations under the Legislation or the securities legislation of the Passport Jurisdictions.

6. The Filer's authorized share capital currently consists of an unlimited number of common shares, without par value, and an unlimited number of preferred shares, without par value, issuable in series, of which 60,511,598 common shares and no preferred shares were outstanding as of November 3, 2010.

7. The Filer's shares are listed for trading on the Toronto Stock Exchange under the symbol "TH".

8. The Filer's financial year end is November 30 of each year.

9. The Filer currently prepares its financial statements in accordance with Canadian GAAP.

10. The Filer has not previously prepared financial statements that contain an explicit and unreserved statement of compliance with IFRS-IASB.

11. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for financial statements relating to fiscal years beginning on or after January 1, 2011.

12. Regulation 52-107 sets out acceptable accounting principles for financial reporting under the legislation by domestic issuers, foreign issuers, registrants and other market participants; under Regulation 52-107, a domestic issuer must use Canadian GAAP, with the exception that a SEC registrant may use US GAAP; under Regulation 52-107, only foreign issuers may use IFRS-IASB.

13. In CSA Staff Notice 52-321 Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, despite section 3.1 of Regulation 52-107.

14. Subject to obtaining the Exemption Sought, the Filer intends to adopt IFRS-IASB with a transition date of December 1, 2008 and a changeover date of December 1, 2009.

15. The Filer believes that the adoption of IFRS-IASB will be in its best interests and will provide a greater benefit to the Filer and users of its financial information and avoid significant costs and complexity during the financial statement preparation process.

16. The Filer has implemented a comprehensive IFRS-IASB conversion plan, including getting its staff to attend training, examining the internal control over financial reporting and disclosure controls and procedures surrounding the adoption of IFRS-IASB, and reviewing the related working papers and skeleton IFRS-IASB financial statements for the period beginning December 1, 2009.

17. The board of directors of the Filer has approved early adoption of IFRS-IASB.

18. The Filer has evaluated, and is satisfied as to, its overall readiness to transition from Canadian GAAP to IFRS-IASB effective at the start of its financial year beginning on December 1, 2009, including the readiness of its staff, board of directors, and audit committee, to deal with the change.

19. The Filer has considered the implication of adopting IFRS-IASB for financial periods beginning on or after December 1, 2009 on its obligations under securities legislation and the securities legislation of the Passport Jurisdictions including, but not limited to, those relating to CEO and CFO certificates, business acquisition reports, offering documents, and previously released material forward-looking information.

20. The most significant financial reporting difference under IFRS-IASB to the Filer's Canadian GAAP statements is with respect to IFRS 2 Share-based payments (IFRS 2). This standard encourages application of IFRS 2 provisions to equity instruments granted on or before November 7, 2002, but permits the application only to equity instruments granted after November 7, 2002 that had not vested by the transition date. The Filer will apply IFRS 2 only to equity instruments granted after November 7, 2002 that had not vested by the date of transition.

21. The Filer's financial statements are available to users via the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.

22. The Filer has communicated its intention to early adopt IFRS-IASB with its external auditors, KPMG LLP (KPMG); KPMG has significant experience with companies that have already transitioned to IFRS-IASB or have been reporting under IFRS-IASB.

23. The Filer will communicate its IFRS-IASB implementation plan to investors as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards by disclosing relevant information about its changeover to IFRS-IASB in a news release not more than seven days after the date of the decision approving such early adoption application, including:

(a) the key elements and timing of the Filer's changeover plan;

(b) the accounting policy and implementation decisions the Filer has made or will have to make;

(c) the exemptions available under IFRS 1 First-time Adoption of International Financial Reporting Standards that the Filer expects to apply in preparing financial statements in accordance with IFRS-IASB;

(d) major identified differences between the Filer's current accounting policies and those the Filer is required or expects to apply in preparing its financial statements in accordance with IFRS-ASB; and

(e) the impact of adopting IFRS-IASB on the key line items in the Filer's financial statements.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that:

(a) the Filer prepares its financial statements for financial periods ending on or after December 1, 2009 in accordance with IFRS-IASB;

(b) the Filer provides all of the communication and information as described and in the manner set out in paragraph 23 above and has also provided the information in its interim management's discussion and analysis including quantitative information regarding the impact of adopting IFRS-IASB on key line items in the Filer's interim financial statements for the third-quarter ended August 31, 2010 and will update the information in its annual management's discussion and analysis and annual financial statements for the year ending November 30, 2010;

(c) the Filer's first IFRS-IASB financial statements for an interim period include an opening statement of financial position as at the date of transition to IFRS-IASB that is presented with equal prominence to the other statements that comprise those interim financial statements; and

(d) if the Filer files interim financial statements prepared in accordance with Canadian GAAP for one or more interim periods in the year that the Filer adopts IFRS-IASB, the Filer will, at or prior to the time of filing its first IFRS-IASB financial statements, restate and refile those interim financial statements originally prepared in accordance with Canadian GAAP in accordance with IFRS-IASB together with the related restated interim management's discussion and analysis as well as the certificates required by Regulation 52-109 respecting Certification of Disclosure in Issuers' Annual and Interim Filings.

"Louis Morisset"
Superintendent Securities Markets
Autorité des marchés financiers