Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Dutch auction issuer bid - With respectto securities tendered at or below the clearing price - Offerorexempt from the requirement in the legislation to take up andpay for securities proportionately according to the number ofsecurities deposited by each securityholder, the associateddisclosure requirement, and the requirement to state the classand number of securities sought under the issuer bid - valuationprovided.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am,ss. 95(7) and 104(2)(c).

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as am. ss. 189(b).

Applicable Ontario Rules

Rule 61-501 - Insider Bids, Issuer Bids, GoingPrivate Transactions and Related Party Transactions.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,MANITOBA AND ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CANADIAN HOME INCOME PLANCORPORATION

 

MRRS DECISION DOCUMENT

WHEREAS the Canadian securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Manitoba, and Ontario (collectively,the "Jurisdictions") has received an application (the"Application") from Canadian Home Income Plan Corporation("CHIP") for a decision pursuant to the securitieslegislation of the Jurisdictions (the "Legislation")that, in connection with the proposed purchase by CHIP of aportion of its outstanding common shares and non-voting commonshares (collectively, the "Shares") pursuant to anissuer bid (the "Bid"), CHIP be exempt from the requirementsin the Legislation to:

(i) take up and pay for securities proportionatelyaccording to the number of securities deposited by eachsecurityholder (the "Proportionate Take-up and PaymentRequirement");

(ii) provide disclosure in the issuer bidcircular (the "Circular") of such proportionatetake-up and payment (the "Associated Disclosure Requirement");and

(iii) state the class and number of securitiessought under the Bid in the Circular (the "Number ofSecurities Requirement").

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor the Application;

AND WHEREAS CHIP has represented to theDecision Makers that:

1. CHIP is incorporated under the CanadaBusiness Corporations Act.

2. CHIP is not a reporting issuer in any ofthe Jurisdictions or in any other jurisdiction.

3. The authorized capital of CHIP includesan unlimited number of Shares, of which approximately 9,378,797Shares were outstanding as at November 4, 2002.

4. CHIP proposes to purchase for cash Sharespursuant to the Bid made by way of the Circular. The Bid wasmade on November 4, 2002 and expires on December 10, 2002.

5. The Shares are not listed on any stockexchange or any other market.

6. The Bid was made pursuant to a modifiedDutch Auction procedure as follows:

(a) the maximum number of Shares (the "SpecifiedNumber") that CHIP intends to purchase under the Bidis specified in the Circular;

(b) the maximum amount of money (the "MaximumAmount") that CHIP is prepared to spend under the Bidis specified in the Circular;

(c) the range of prices (the "Range")within which CHIP is prepared to repurchase Shares underthe Bid is also specified in the Circular;

(d) holders of Shares (the "Shareholders")wishing to tender to the Bid will be able to specify thelowest price within the Range at which they are willingto sell their Shares (an "Auction Tender");

(e) Shareholders wishing to tender to theBid but who do not wish to make an Auction Tender may electto be deemed to have tendered at the Clearing Price (definedbelow) determined in accordance with subparagraph 6(f) below(a "Clearing Price Tender");

(f) the purchase price (the "ClearingPrice") of the Shares tendered to the Bid will be thelowest price that will enable CHIP to purchase the maximumnumber of Shares that may be purchased with the MaximumAmount and will be determined based upon the number of Sharestendered pursuant to an Auction Tender at each price withinthe Range and the number of Shares tendered pursuant toa Clearing Price Tender, with each Clearing Price Tenderbeing considered a tender at the lowest price in the Rangefor the purpose of calculating the Clearing Price;

(g) all Shares tendered (and not withdrawn)at or below the Clearing Price pursuant to an Auction Tenderor a Clearing Price Tender will be taken up and paid forat the Clearing Price, subject to proration if the aggregatenumber of Shares tendered at or below the Clearing Pricepursuant to Auction Tenders and the number of Shares tenderedpursuant to Clearing Price Tenders exceeds the SpecifiedNumber or would require CHIP to spend more than the MaximumAmount (an "Over-Subscription");

(h) in the event of an Over-SubscriptionCHIP will purchase at the Clearing Price from Shareholderswho deposited Shares at or below the Clearing Price theShares so deposited for an aggregate Clearing Price of theMaximum Amount on a pro rata basis. Multiple tenders bythe same shareholder will be aggregated for this proration;

(i) all Shares tendered at prices abovethe Clearing Price will be returned to the appropriate Shareholders;

(j) if, as a result of proration, the numberof Shares to be returned to a tendering Shareholder is lessthan 1,000 Shares, CHIP will purchase at the Clearing Priceall of such Shares from such Shareholders, resulting inthe purchase of a number of Shares greater than the SpecifiedNumber, in order to avoid the creation of holdings of lessthan 1,000 Shares, or "Small Holdings", due toproration; and

(k) all Shares tendered by Shareholderswho specify a tender price for such tendered Shares thatfalls outside the Range or who fail to specify any tenderprice and fail to indicate that they have tendered pursuantto a Clearing Price Tender, will be considered to have beenimproperly tendered, will be excluded from the determinationof the Clearing Price, will not be purchased by CHIP andwill be returned to the tendering Shareholders.

7. Prior to the expiry of the Bid, all informationregarding the number of Shares tendered and the prices atwhich such Shares are tendered will be kept confidential,and the depository under the Bid will be directed by CHIPto maintain such confidentiality until the Clearing Priceis determined.

8. CHIP has provided a formal valuation inthe Circular, in accordance with Ontario Securities CommissionRule 61-501.

9. Since the Bid is for less than all theShares, if the number of Shares tendered to the Bid at orbelow the Clearing Price exceeds the maximum number of Shareswhich CHIP is prepared to purchase, the Legislation wouldrequire CHIP to take up and pay for deposited Shares proportionately,according to the number of Shares deposited by each Shareholder.In addition, the Legislation would require disclosure in theCircular that CHIP would, if Shares tendered to the Bid exceededthe Specified Number, take up such Shares proportionatelyaccording to the number of Shares tendered by each Shareholder.

10. The Circular:

(a) discloses the mechanics for the take-upof and payment for, or the return of, Shares as describedin paragraph 6(g) above; and

(b) explains that, by tendering Shares atthe lowest price in the Range, a Shareholder can reasonablyexpect that the Shares so tendered will be purchased atthe Clearing Price, subject to proration and subject tothe purchase of Post-Offer Small Holdings as described inparagraph 6(j) above.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each of theDecision Makers (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers inthe Jurisdictions pursuant to the Legislation is that, in connectionwith the Bid, CHIP is exempt from the Proportionate Take-upand Payment Requirement, the Associated Disclosure Requirementand the Number of Securities Requirement, provided that Sharestendered to the Bid are taken up and paid for, or returned tothe Shareholders, in the manner and circumstances describedin paragraph 6 above.

December 9, 2002.

"Howard I. Wetston"                    "RobertW. Davis"