Trans Quebec and Maritimes Pipeline Inc. et al.

Headnote

National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions -- Trans Québec & Maritimes Pipeline Inc., a reporting issuer, is seeking relief from requirements in Parts 4 and 5 of NI 51-102 relating to the filing of its annual and interim financial statements on a stand-alone basis along with the accompanying annual or interim Management Discussion and Analysis provided that it files combined annual and interim financial statements for itself and Trans Québec & Maritimes Pipeline Inc., as mandatary for TQM Pipeline and Company, Limited Partnership Inc. (TQM Partnership) (the Combined Financial Statements) and accompanying MD&A based on the Combined Financial Statements; Parts 4 and 5 of NI 52-109 provided that the certificates are filed by TQM Inc. in respect of the Combined Financial Statements and related MD&A and section 3.2 of NI 52-107 so that the reporting issuer can file financial statements for TQM Partnership in accordance with Canadian GAAP (Part V of the Handbook of the Canadian Institute of Chartered Accountants (the Handbook)) (rather than IFRS) for periods relating to the issuer's financial year beginning on or after 1 January 2012 and ending December 31, 2012. TQM Partnership is a "rate regulated entity" as defined in Accounting Guideline 19 Disclosures by entities subject to rate regulation in the Handbook -- The Canadian Accounting Standards Board decided on October 2012 that rate regulated entities will only be required to adopt IFRS for annual periods beginning on or after January 1, 2014 -- Since Part 3 of Regulation 52-107 does not have a provision providing for a two-year deferral of the transition to IFRS for rate regulated entities subject to Regulation 52-107. TQM Inc. has requested an extension of the deferral permitted under section 5.4 of NI 52-107 -- Relief granted subject to a number of conditions.

Applicable Legislative Provisions

Securities Act,R.S.O. 1990, c.S.5, as am.,

National Instrument 51-102 Continuous Disclosure Obligations

National Instrument 52-107 Acceptable Accounting Principle and Auditing Standards

National Instrument 52-109 Certification of Disclosure in Annual and Interim Filings

December 28, 2012

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

TRANS QUÉBEC & MARITIMES PIPELINE INC.

(TQM Inc.) AND

TRANS QUÉBEC & MARITIMES PIPELINE INC.,

AS MANDATARY FOR

TQM PIPELINE AND COMPANY, LIMITED PARTNERSHIP

(the Partnership)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application (the Application) from TQM Inc. for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting TQM Inc. from the following requirements:

1. Regulation 51-102 respecting Continuous Disclosure Obligations (Regulation 51-102), that TQM Inc. be exempted from the obligations in Parts 4 and 5 of Regulation 51-102, relating to the filing of its annual and interim financial statements on a stand alone basis along with the accompanying annual or interim Management Discussion and Analysis (MD&A) provided that TQM Inc. files combined annual and interim financial statements of TQM Inc. and the Partnership (hereinafter defined as the Combined Financial Statements) and accompanying MD&A based on the combined financial statements; and

2. Regulation 52-109 respecting Certification of Disclosure in Annual and Interim Filings (Regulation 52-109), that TQM Inc. be exempted from the obligations in Parts 4 and 5 of Regulation 52-109 in respect of filing the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) certificates that TQM Inc. would normally file if it prepared stand alone annual and interim financial statements and accompanying MD&A, provided that the certificates are filed by TQM Inc. in respect of the Combined Financial Statements and related MD&A.

(collectively, the Continuous Disclosure Exemptions).

3. Regulation 52-107, respecting Acceptable Accounting Principles and Auditing Standards (Regulation 52-107), that TQM Inc. be exempted from the requirements of section 3.2 in order to permit the preparation and filing by TQM Inc. of financial statements of the Partnership for the financial year commencing January 1, 2012 and ending December 31, 2012 in accordance with Part V of the Canadian Institute of Chartered Accountants Handbook (the Handbook) (the First 52-107 Exemption).

4. Regulation 52-107, that TQM Inc. be exempted from the requirements of section 3.2 of Regulation 52-107 in order to permit the preparation and filing by TQM Inc. in accordance with United States generally accepted accounting principles (U.S. GAAP) Combined Financial Statements for financial years commencing on or after January 1, 2013 but before January 1, 2015 (the Second 52-107 Exemption).

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

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

(b) TQM Inc. has provided notice that subsection 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, Nova Scotia, New Brunswick, 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, Regulation 11-102, Regulation 51-102, Regulation 52-107 and Regulation 52-109 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by TQM Inc.:

1. TQM Inc. was incorporated under the Canada Business Corporations Act on April 24, 1980. The head office of TQM Inc. is in Montreal, Québec.

2. Each of 9265-0860 Quebec Inc. (9265), a wholly owned subsidiary of Gaz Métro Limited Partnership (Gaz Métro) and TransCanada PipeLines Limited (TransCanada) (hereinafter collectively referred to as the Partners) owns 50 percent of the issued and outstanding shares in the share capital of TQM Inc.

3. The Partnership was formed on January 5, 1982 as a general partnership pursuant to the laws of Quebec. TQM Inc. was appointed mandatary of the Partnership to administer and manage the Partnership and to construct and operate a pipeline system in the Province of Québec (the Pipeline System) and to carry on its business in accordance with the General Partnership Agreement of the Partnership (the Partnership Agreement). On August 24, 1995 the Partnership was converted from a general partnership into a limited partnership governed by the laws of the Province of Québec of which Gaz Métro and TransCanada became the general partners and 3118240 Canada Inc. became the limited partner. Each of the general partners owns a 49.995 percent participation interest in the Partnership and 3118240 Canada Inc. owns the remaining 0.01 percent participation interest.

4. The Pipeline System is regulated by the National Energy Board (the NEB) pursuant to the National Energy Board Act (the Act). Due to the construct of the Act, there was doubt as to whether a partnership was permitted to own and operate a pipeline. As a result, TQM Inc. as a corporate entity was formed to do so on behalf of the Partnership.

5. TQM Inc. operates the Pipeline System, holds registered title to the Pipeline System on behalf of the Partnership and acts on behalf of the Partnership for the purposes of applying for and holding authorizations and certificates from the NEB. TQM Inc. acts solely as a mandatary and does not have an ownership interest in the Partnership, nor does it receive any revenue associated with the Pipeline System.

6. As a result of tax changes announced by Canada's Minister of Finance in its budget of March 22, 2011, affecting limited partnerships, which led to amendments to the federal Income Tax Act, Gaz Métro assigned, transferred and conveyed to 9265, its wholly owned subsidiary, all of its holdings in TQM Inc. and the Partnership, effective September 30, 2012.

7. TQM Inc. is a reporting issuer in the Jurisdictions and in each of the Passport Jurisdictions. It is a venture issuer for purposes of Regulation 51-102 and is not in default of securities legislation in any jurisdiction. Its year end is December 31.

8. TQM Inc. currently has outstanding $75 million principal amount 4.05% Series K Bonds (the Series K Bonds) and $100 million principal amount 4.25% Series L Bonds (the Series L Bonds). The Series K Bonds mature September 2014 and the Series L Bonds mature September 2017. The bonds of TQM Inc. are unconditionally guaranteed by the Partnership. The terms of the outstanding debt under the Partnership's credit facility and with respect to the Series K Bonds and Series L Bonds are governed by a Credit Agreement and Trust Deed, respectively, to which TQM Inc. is a party. The Credit Agreement and Trust Deed both have restrictions on TQM Inc.'s ability to incur debt, grant security and carry on business other than the business of the Partnership while the bonds remain outstanding.

9. TQM Inc. will not issue any debt in its own capacity that is not unconditionally guaranteed by the Partnership and will be in compliance with the applicable restrictions of the Credit Agreement and Trust Deed.

10. Currently, TQM Inc. files its own financial statements along with financial statements as mandatary of the Partnership, pursuant to an Undertaking dated May 1, 1985 (the Undertaking) with the securities regulator or regulatory authority (as applicable) in Québec, Ontario, Alberta, British Columbia, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland. The financial statements of TQM Inc. as mandatary of the Partnership are not consolidated in the financial statements of TQM Inc. but instead are combined in the financial statements of TQM Inc.

11. Despite its undertaking, TQM Inc. is also subject to the other continuous disclosure requirements under applicable securities regulation (the Other CD Regulations).

12. TQM Inc. and the Partnership are not SEC issuers.

13. The Partnership has "activities subject to rate regulation" as defined in Accounting Guideline 19 -- Disclosures by entities subject to rate regulation -- Part V of the Handbook (AcG 19).

14. On October 1, 2010, the Canadian Accounting Standards Board (the AcSB) published amendments to Part 1 of the Handbook that provided a one-year deferral of the transition to International Financial Reporting Standards (IFRS) for entities with qualifying rate-regulated activities. The amendments required such entities, as defined in AcG-19, to adopt IFRS for annual periods beginning on or after January 1, 2012.

15. As a "qualifying entity" for purposes of section 5.4 of Regulation 52-107, the Partnership is permitted by that provision to prepare its financial statements for its financial year commencing January 1, 2011 and ending December 31, 2011, in accordance with Canadian generally accepted accounting principles (Canadian GAAP) -- pursuant to Part V of the Handbook.

16. In March 2012, the AcSB decided to extend the deferral of the mandatory IFRS changeover date for entities with qualifying rate-regulated activities by an additional year, so that these entities are only required to adopt IFRS for annual periods beginning on or after January 1, 2013.

17. The March 2012 decision of the AcSB to extend, by one year, the deferral of the mandatory IFRS changeover date for entities with qualifying rate-regulated activities is not currently reflected in Regulation 52-107 and the Other CD Regulations.

18. In October 2012, the AcSB decided to extend the deferral of the mandatory IFRS changeover date by an additional year, such that entities with qualifying rate-regulated activities, as defined in AcG-19 of the Handbook, are only required to adopt IFRS for annual periods beginning on or after January 1, 2014.

19. The October 2012 decision of the AcSB to extend, by another year, the deferral of the mandatory IFRS changeover date for entities with qualifying rate-regulated activities is not currently reflected in Regulation 52-107 and the Other CD Regulations. However, given that each of the Partners of TQM Inc. and the Partnership currently use or expect to use U.S. GAAP, TQM Inc. would prefer to adopt U.S. GAAP effective January 1, 2013 and not rely on this extension.

20. Regulation 52-107 and the Other CD Regulations apply to the Partnership. Since Part 3 of Regulation 52-107 and the amendments to the Other CD Regulations do not have a provision providing for a two-year deferral of the transition to IFRS for entities with rate-regulated activities subject to Regulation 52-107 and the Other CD Regulations, TQM Inc. has applied for the First 52-107 Exemption.

21. If the Partnership was an SEC issuer, it would be permitted by section 3.7 of Regulation 52-107 to file its financial statements prepared in accordance with U.S. GAAP, which accords treatment of "activities subject to rate regulation" similar to that under Canadian GAAP -- Part V of the Handbook.

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.

1. The decision of the Decision Makers under the Legislation is that the Continuous Disclosure Exemptions sought are granted provided that:

(a) Regulation 51-102:

i. TQM Inc. remains a reporting issuer in a designated Canadian jurisdiction, complies with Regulation 51-102 or the conditions of any exemptions therefrom and is an electronic filer under Regulation 13-101 System for Electronic Document Analysis and Retrieval (SEDAR) and will file all documents it is required to file for TQM Inc. and TQM Partnership under Regulation 51-102 or under the conditions of any exemptions therefrom;

ii. TQM Inc. is responsible for issuing news releases and filing material change reports in accordance with Part 7 of Regulation 51-102 for all material changes in respect of the affairs of TQM Inc. and the Partnership;

iii. TQM Inc. files, under its profile on the System for Electronic Document Analysis and Retrieval (SEDAR), Combined Financial Statements prepared in accordance with accounting principles permitted under the Second 52-107 Exemption sought as applicable, and then under Regulation 52-107 thereafter;

iv. any Combined Financial Statements filed by TQM Inc. include the applicable components specified in Parts 4 and 5 of Regulation 51-102 for annual and interim financial reporting and accompanying annual and interim MD&A;

v. the Combined Financial Statements are clearly identified as Combined Financial Statements of TQM Inc. and the Partnership;

vi. the Combined Financial Statements are supplemented by a complete description of the corporate structure of TQM Inc. in the notes;

vii. the annual Combined Financial Statements filed by TQM Inc. are audited;

viii. prior to filing unaudited Combined Financial Statements for each interim period and audited annual Combined Financial Statements, TQM Inc. and its auditor have concluded that the preparation of the Combined Financial Statements is acceptable using accounting principles permitted under the Second 52-107 Exemption sought as applicable, and then under Regulation 52-107 thereafter;

ix. the annual Combined Financial Statements filed by TQM Inc. are accompanied by the applicable fees; and

x. the MD&A filed by TQM Inc. are prepared with reference to the Combined Financial Statements.

(b) Regulation 52-109:

i. TQM Inc. is responsible for filing annual and interim certificates required under Parts 4, 5 and 6 of Regulation 52-109, in connection with the filing of the Combined Financial Statements prepared in accordance with accounting principles permitted under the Second 52-107 Exemption sought as applicable, and then under Regulation 52-107 thereafter;

ii. the CEO and the CFO of TQM Inc. continue to sign the required certificates under Regulation 52-109 in respect of the Combined Financial Statements; and

iii. TQM Inc. continues to satisfy the requirements set out in Regulation 52-109 for the Combined Financial Statements on behalf of TQM Inc. and the Partnership.

2. The decision of the Decision Makers under the legislation is that the First 52-107 Exemption is granted provided that:

(a) for the financial year commencing January 1, 2012 and ending December 31, 2012, including interim periods therein, TQM Inc. files financial statements as mandatary of the Partnership prepared in accordance with Canadian GAAP pursuant to Part V of the Handbook; and

(b) information for comparative periods presented in the financial statements referred to in the preceding paragraph is prepared in accordance with Canadian GAAP pursuant to Part V of the Handbook.

This Exemption will terminate in respect of the financial statements for annual (and interim periods therein) commencing on or after the earlier of:

(a) January 1, 2013; and

(b) the date on which the Partnership ceases to be an entity subject to rate regulation, as defined in AcG-19.

3. The decision of the Decision Makers under the legislation is that the Second 52-107 Exemption is granted provided that:

(a) for its financial years commencing on or after January 1, 2013 but before January 1, 2015 and interim periods therein, TQM Inc. files Combined Financial Statements prepared in accordance with U.S. GAAP; and

(b) information for comparative periods presented in the financial statements referred to in the preceding paragraph is prepared in accordance with U.S. GAAP.

This Exemption will terminate in respect of the Combined Financial Statements for annual (and interim periods therein) commencing on or after the earlier of:

(a) January 1, 2015; and

(b) the date on which the Partnership ceases to be an entity subject to rate regulation, as defined in AcG-19.