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 44-101, Short Form Prospectus Distributions, section 8.1 and National Instrument 44-102 Shelf Distributions, section 11.1(1) -- Qualification -- An issuer that does not meet the eligibility criteria in section 2.2 or 2.3 of NI 44-101 or because it does not have securities listed on an exchange in Canada wants to use the short form prospectus system; the issuer is a reporting issuer in Canada; the issuer's shares are listed on NASDAQ and are not listed on a Canadian exchange; the issuer is subject to the reporting requirements of the United States Securities Exchange Act of 1934.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions, s. 8.1(1).

National Instrument 44-102 Shelf Distributions, s. 11.1(1).

December 22, 2015

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF AQUINOX PHARMACEUTICALS, INC. (the Filer)

DECISION

Background

1 The securities regulatory authority or regulator in each of the Jurisdictions (Decision Makers) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the qualification criteria in subsection 2.2(e) of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101) and subsections 2.2(1), 2.2(2) and 2.2(3)(b)(iii) of National Instrument 44-102 Shelf Distributions that the equity securities of the Filer be listed and posted for trading on a short form eligible exchange (as defined in NI 44-101) does not apply to the Filer (the Requested Relief).

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

(a) the British Columbia Securities Commission is the principal regulator for this application;

(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta; and

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

Interpretation

2 Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. the Filer is a corporation existing under the laws of Delaware and its head office is located in British Columbia;

2. the Filer is a clinical-stage pharmaceutical company focused on discovering and developing targeted therapeutics in disease areas of inflammation and immuno-oncology;

3. the Filer is, and has been for the last 12 months, a reporting issuer in British Columbia, and is not in default of any of its obligations as a reporting issuer under the securities legislation of British Columbia;

4. the Filer is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, of the United States and is not in default of any requirement of applicable securities laws of the United States;

5. the Filer's authorized capital consists of 50,000,000 shares of common stock and 5,000,000 shares of preferred stock, of which 17,211,986 shares of common stock and no shares of preferred stock were issued and outstanding as of December 14, 2015;

6. the common stock of the Filer is quoted for trading on The NASDAQ Global Market (NASDAQ) under the symbol "AQXP", but is not listed and posted for trading on any stock exchange in Canada;

7. a short form eligible exchange is defined in NI 44-101 as the Toronto Stock Exchange, Tier 1 and Tier 2 of the TSX Venture Exchange, Aequitas NEO Exchange Inc. or the Canadian Securities Exchange; and

8. the Filer satisfies the basic qualification criteria in section 2.2 of NI 44-101, other than having its securities listed and posted for trading on a short form eligible exchange.

Decision

4 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 Requested Relief is granted provided that:

(a) the Filer complies with all applicable requirements, procedures and qualification criteria of NI 44-101, other than the requirement in subsection 2.2(e) of NI 44-101 that the Filer's equity securities be listed and posted for trading on a short form eligible exchange; and

(b) the common stock of the Filer is listed and posted for trading on NASDAQ on the date of filing by the Filer of a final short form prospectus in the Jurisdictions pursuant to NI 44-101.

"Peter J. Brady"
Director, Corporate Finance
British Columbia Securities Commission