Intact Financial Corporation -- s. 104(2)(c)

Headnote

Clause 104(2)(c) -- Issuer bid -- relief from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act -- Issuer proposes to purchase, at a discounted purchase price, up to 150,000 of its common shares from one of its shareholders and/or such shareholder's affiliates -- due to discounted purchase price, proposed purchases cannot be made through TSX trading system -- but for the fact that the proposed purchases cannot be made through the TSX trading system, the Issuer could otherwise acquire the subject shares in reliance upon the issuer bid exemption available under section 101.2 of the Securities Act and in accordance with the TSX rules governing normal course issuer bid purchases -- no adverse economic impact on or prejudice to issuer or public shareholders -- proposed purchases exempt from issuer bid requirements in sections 94 to 94.8 and 97 to 98.7 of the Act, subject to conditions, including that the issuer not purchase more than one-third of the maximum number of shares to be purchased under its normal course issuer bid by way of off-exchange block purchases.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 94 to 94.8, 97 to 98.7, 104(2)(c).

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(the "Act")

AND

IN THE MATTER OF

INTACT FINANCIAL CORPORATION

ORDER

(Section 104(2)(c))

UPON the application (the "Application") of Intact Financial Corporation (the "Issuer") to the Ontario Securities Commission (the "Commission") for an order pursuant to section 104(2)(c) of the Act for an order exempting the Issuer from sections 94 to 94.8 and 97 to 98.7 of the Act (the "Issuer Bid Requirements") in connection with the proposed purchase or purchases ("Proposed Purchases") by the Issuer of up to 150,000 (the "Subject Shares") of the Issuer's common shares (the "Shares") from The Bank of Nova Scotia and/or its affiliates (the "Selling Shareholder");

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

AND UPON the Issuer (and the Selling Shareholder in respect of paragraphs 5, 6, 7, 8, 9, 12, and 24 as they relate to the Selling Shareholder) having represented to the Commission that:

1. The Issuer is a corporation existing under the Canada Business Corporations Act.

2. The registered and head office of the Issuer is located at 700 University Avenue, Suite 1500, Toronto, Ontario, M5G 0A1.

3. The Issuer is a reporting issuer in each of the provinces and territories of Canada (the "Jurisdictions") and the Shares are listed for trading on the Toronto Stock Exchange (the "TSX"). The Issuer is not in default of any requirement of the securities legislation in the Jurisdictions.

4. The authorized share capital of the Issuer currently consists of an unlimited number of Shares and an unlimited number of Class A shares. As at March 7, 2011, 110,200,065 Shares and no Class A shares were issued and outstanding.

5. The executive office of the Selling Shareholder is located in Toronto, Ontario.

6. The Selling Shareholder does not directly or indirectly own more than 5% of the issued and outstanding Shares.

7. The Selling Shareholder owns the Subject Shares and the Subject Shares were not acquired in anticipation of resale pursuant to private agreements under an issuer bid exemption order issued by a securities regulatory authority.

8. The Selling Shareholder is at arm's length to the Issuer and is not an "insider" of the Issuer, an "associate" of an "insider" of the Issuer, or an "associate" or "affiliate" of the Issuer, as such terms are defined in the Act.

9. The Selling Shareholder is an "accredited investor" within the meaning of National Instrument 45-106 Prospectus and Registration Exemptions ("NI 45-106").

10. Pursuant to a "Notice of Intention to Make a Normal Course Issuer Bid" dated February 16, 2011 (the "Notice") filed with the TSX, the Issuer is permitted to make normal course issuer bid (the "Bid") purchases (each, a "Bid Purchase") to a maximum of 5,523,548 Shares in accordance with sections 628 to 629.3 of Part VI of the TSX Company Manual (the "TSX Rules"). As at March 7, 2011, 191,600 Shares have been purchased under the Bid. Assuming completion of the purchase of the Subject Shares, the Issuer will have purchased under the Bid an aggregate of 150,000 Shares pursuant to private agreements under issuer bid exemption orders issued by a securities regulatory authority, representing approximately 2.7% of the 5,523,548 Shares authorized to be purchased under the Bid.

11. In addition to making Bid Purchases by means of open market transactions, the Notice contemplates that the Issuer may purchase Shares by other means as may be permitted by the TSX, including pre-arranged crosses and private agreements under an order issued by a securities regulatory authority.

12. The Issuer and the Selling Shareholder intend to enter into one or more agreements of purchase and sale (each, an "Agreement") pursuant to which the Issuer will agree to acquire, by one or more trades occurring prior to March 22, 2011, the Subject Shares from the Selling Shareholder for purchase prices (each, a "Purchase Price") that will be negotiated at arm's length between the Issuer and the Selling Shareholder. The Purchase Price will be at a discount to the prevailing market price and below the prevailing bid-ask price for the Shares.

13. The purchase of any of the Subject Shares by the Issuer pursuant to an Agreement will constitute an "issuer bid" for purposes of the Act to which the Issuer Bid Requirements would apply.

14. Because the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Shares at the time of each trade, the Proposed Purchases cannot be made through the TSX trading system and, therefore, will not occur "through the facilities" of the TSX. As a result, the Issuer will be unable to acquire the Subject Shares from the Selling Shareholder in reliance upon the exemption from the Issuer Bid Requirements that is available pursuant to section 101.2(1) of the Act.

15. Except for the fact that the Purchase Price will be at a discount to the prevailing market price and below the bid-ask price for the Shares at the time of the Proposed Purchases, the Issuer could otherwise acquire the Subject Shares as a "block purchase" (a "Block Purchase") in accordance with section 629(l)(7) of the TSX Rules and the exemption from the Issuer Bid Requirements in section 101.2(1) of the Act.

16. The sale of any of the Subject Shares to the Issuer will not be a "distribution" (as defined in the Act).

17. The Selling Shareholder will either not be required to be registered as a dealer under the Act in connection with the sale of the Subject Shares to the Issuer or the Selling Shareholder will sell the Subject Shares to the Issuer in reliance upon an exemption from the dealer registration requirements under the Act that is available as a result of the combined effect of Section 2.16 of NI 45-106 and Section 4.1(a) of Commission Rule 45-501 Ontario Prospectus and Registration Exemptions.

18. Senior management of the Issuer believes that through the Proposed Purchases, the Issuer will be able to purchase the Subject Shares at a lower price than the price at which the Issuer would otherwise be able to purchase the Shares under the Bid and senior management believes that this is an appropriate use of the Issuer's funds.

19. The Proposed Purchases will also be carried out with a minimum of cost to the Issuer.

20. The Proposed Purchases will not adversely affect the Issuer, the rights of any of the Issuer's securityholders or control of the Issuer.

21. To the best of the Issuer's knowledge, as at March 7, 2011, the public float for the Shares consisted of approximately 99% for purposes of the TSX Rules.

22. The market for the Shares is a "liquid market" within the meaning of Section 1.2 of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions. The Proposed Purchases would not have any effect on the ability of other shareholders of the Issuer to sell their Shares in the market.

23. Other than the Purchase Price, no additional fee or other consideration will be paid in connection with the Proposed Purchases.

24. At the time that an Agreement is entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer nor the Selling Shareholder will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed.

AND UPON the Commission being satisfied to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 104(2)(c) of the Act that the Issuer be exempt from the Issuer Bid Requirements in connection with the Proposed Purchases, provided that:

(a) the Proposed Purchases will be taken into account by the Issuer when calculating the maximum annual aggregate limit for the Bid Purchases in accordance with the TSX Rules;

(b) the Issuer will refrain from conducting a Block Purchase in accordance with the TSX Rules during the calendar week it completes each Proposed Purchase and may not make any further Bid Purchases for the remainder of that calendar day;

(c) the Purchase Price is not higher than the last "independent trade" (as that term is used in paragraph 629(1)1 of the TSX Rules) of a board lot of Shares immediately prior to the execution of each Proposed Purchase;

(d) the Issuer will otherwise acquire any additional Shares pursuant to the Bid and in accordance with the TSX Rules;

(e) immediately following its purchase of the Subject Shares from the Selling Shareholder, the Issuer will report the purchase of the Subject Shares to the TSX;

(f) at the time that an Agreement is entered into by the Issuer and the Selling Shareholder and at the time of each Proposed Purchase, neither the Issuer nor the Selling Shareholder will be aware of any "material change" or "material fact" (each as defined in the Act) in respect of the Issuer that has not been generally disclosed;

(g) the Issuer will issue a press release in connection with the Proposed Purchases; and

(h) the Issuer does not purchase, pursuant to private agreements under an issuer bid exemption order issued by a securities regulatory authority, more than one-third of the maximum number of Shares the Issuer can purchase under the Bid.

Dated at Toronto this 15th day of March, 2011