IN THE MATTER OF THE SECURITIES LEGISLATION OF NOVA SCOTIA, BRITISH
COLUMBIA, MANITOBA, NEWFOUNDLAND AND LABRADOR, PRINCE EDWARD ISLAND, NEW BRUNSWICK, YUKON,
NORTHWEST TERRITORIES AND NUNAVUT
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF THE BANK OF NOVA SCOTIA
AND
SCOTIABANK CAPITAL TRUST
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory
authority
or regulator (the "Decision Maker") in each of Nova Scotia, British Columbia,
Manitoba, Newfoundland and Labrador, Prince Edward Island, New Brunswick, Yukon, Northwest
Territories and Nunavut (collectively, the "Jurisdictions") has received an
application (the "Application") on behalf of The Bank of Nova Scotia (the
"Bank") and Scotiabank Capital Trust (the "Trust") for a decision
pursuant to the securities legislation of the Jurisdictions (the "Legislation")
that certain trades in securities of the Bank are exempt from the requirements under the
Legislation to be registered to trade in a security (the "Registration
Requirement") and to file and obtain a receipt for a preliminary prospectus and a
prospectus (the "Prospectus Requirement"), subject to certain conditions;
AND WHEREAS pursuant to the Mutual Reliance Review
System for Exemptive Relief Applications (the "System"), the Nova Scotia
Securities Commission is the principal regulator for the Application;
AND WHEREAS unless otherwise defined, the terms herein
have the meaning set out in National Instrument 14-101 Definitions;
AND WHEREAS the Bank and the Trust have represented to
the Decision Makers that:
1. The Trust is an open-end trust established under the laws of the Province
of Ontario by
Computershare Trust Company of Canada (the "Trustee"), as trustee, pursuant to
an amended and restated declaration of trust made as of April 23, 2002 (the
"Declaration of Trust").
2. The Trust is a reporting issuer or the equivalent in each of the provinces and
territories of Canada that provides for a reporting issuer regime. The Trust has received
from the securities regulatory authorities in those provinces and territories exemptions
dated July 26, 2002 from certain continuous disclosure requirements prescribed under the
Legislation. The Trust remains subject to the requirement to file material change reports
in the event of any material change in the affairs of the Trust. The Trust is not in
default of any of the conditions of the exemptions.
3. Following completion of the Offering described below, the authorized capital
of the Trust will consist of an unlimited number of (i) Special Trust Securities
(the "Special Trust Securities"); (ii) Scotiabank Trust Securities - Series 2002-1
(the "Scotia BaTS II Series 2002-1"); and (iii) Scotiabank Trust Securities
– Series 2003-1 (the "Scotia BaTS II Series 2003-1" and, collectively, with
the Scotia BaTS II Series 2002-1 the "Scotia BaTS II"). The Special Trust
Securities and the Scotia BaTS II are collectively referred to herein as the "Trust
Securities". As at October 31, 2002, there were 2,000 Special Trust Securities
issued and outstanding, all held by the Bank, and 750,000 Scotia BaTS II Series
2002-1 issued and
outstanding.
4. The Trust was established solely for the purpose of effecting public offerings
of Scotia BaTS II and possible future offerings of securities in order to provide
the Bank
with a cost effective means of raising capital for Canadian financial institutions
regulatory purposes by means of: (i) creating and selling the Trust Securities;
and (ii) acquiring and holding assets, which, on completion of the Offering,
will consist primarily
of two senior deposit notes issued by the Bank, namely the Bank Series 2002-1
Deposit Note (acquired by the Trust in connection with the issue of the Scotia
BaTS II Series 2002-1)
and the Bank Series 2003-1 Deposit Note (to be acquired by the Trust with the
proceeds of the Offering) (together with other senior deposit notes of the Bank
held by the Trust from
time to time, the "Bank Deposit Notes"). The Bank Deposit Notes will
generate income for distribution to holders of the Trust Securities. The Trust
does not and will
not carry on any operating activity other than in connection with the offering
of the
Scotia BaTS II and any future offerings.
5. Subject to regulatory approval, the Scotia BaTS II Series 2003-1 will qualify as Tier 1
Capital of the Bank.
6. The Bank is a bank under the Bank Act (Canada) and the Bank Act (Canada)
is its charter.
7. The Bank is a reporting issuer or the equivalent in each of the provinces and
territories of Canada that provides for a reporting issuer regime and is not in default of
any reporting requirement under the Legislation.
8. The authorized share capital of the Bank consists of an unlimited number of
(i) common
shares (the "Bank Common Shares"); and (ii) preferred shares (the "Bank
Preferred Shares"), issuable in series.
9. Pursuant to the Prospectus described below, the Trust proposes to issue and
sell to investors transferable trust units, being the Scotia BaTS II Series 2003-1
(the "Offering"), to be issued at a price of $1,000 per Scotia BaTS
II Series 2003-1. Each Scotia BaTS II Series 2003-1 will represent an undivided
beneficial ownership
interest in the assets of the Trust.
10. Pursuant to the terms of the Scotia BaTS II Series 2003-1 and a Share Exchange
Agreement (the "Series 2003-1 Share Exchange Agreement") to be entered into
among the Bank, the Trust and a party acting as exchange trustee, the Scotia BaTS II
Series 2003-1 may be exchanged, at the option of the holders of Scotia BaTS II Series
2003-1 (the "Series 2003-1 Holder Exchange Right"), for Bank Preferred Shares
Series U. The Scotia BaTS II Series 2003-1 will be automatically exchanged, without the
consent of the holder, for Bank Preferred Shares Series V upon the occurrence of certain
stated events relating to the solvency of the Bank or actions taken by the Superintendent
of Financial Institutions (the "Superintendent") in respect of the Bank (the
"Series 2003-1 Automatic Exchange"). The Bank Preferred Shares Series U and V
are collectively referred to herein as the "Series 2003-1 Bank Exchange Preferred
Shares".
11. The Bank Series 2003-1 Deposit Note will be convertible (i) at any time at
the option of the holder into Bank Preferred Shares Series U, exercisable by
the Trust in
circumstances in which holders of Scotia BaTS II Series 2003-1 exercise the Series
2003-1 Holder Exchange Right, and (ii) automatically into Bank Preferred Shares
Series V in
circumstances giving rise to a Series 2003-1 Automatic Exchange (such rights
of conversion referred to in items (i) and (ii) above being referred to herein
as the "Series
2003-1 Conversion Rights"), in each case to enable the Trust to satisfy
its obligation to deliver Series 2003-1 Bank Exchange Preferred Shares of the
appropriate
series to holders of Scotia BaTS II Series 2003-1 in connection with the Series
2003-1
Holder Exchange Right or Series 2003-1 Automatic Exchange, as applicable.
12. Pursuant to the Series 2003-1 Share Exchange Agreement, the Bank will grant
to the Trust the right to subscribe, if necessary following the maturity of the
Bank Series
2003-1 Deposit Note, for Series 2003-1 Bank Exchange Preferred Shares of the
appropriate series to enable the Trust to give effect to the Series 2003-1 Holder
Exchange Right and
the Series 2003-1 Automatic Exchange following such maturity (the "Series 2003-1
Subscription Right").
13. The Series 2003-1 Holder Exchange Right will be effected through the conversion by the
Trust of the corresponding principal amount of the Bank Series 2003-1 Deposit Note into
Bank Preferred Shares Series U, or the acquisition by the Trust of such shares through the
exercise of the Series 2003-1 Subscription Right. Holders of Scotia BaTS II Series 2003-1
exercising the Series 2003-1 Holder Exchange Right will, upon surrendering the Scotia BaTS
II Series 2003-1 to be exchanged, receive from the Trust 40 Bank Preferred Shares Series U
in respect of each Scotia BaTS II Series 2003-1 so exchanged and the Scotia BaTS II Series
2003-1 surrendered for exchange will be cancelled.
14. The Series 2003-1 Automatic Exchange will be effected through the automatic conversion
of each $1,000 principal amount of the Bank Series 2003-1 Deposit Note into 40 Bank
Preferred Shares Series V, or the acquisition by the Trust of such shares through the
exercise of the Series 2003-1 Subscription Right. Each holder of Scotia BaTS II Series
2003-1 will be deemed to have surrendered each Scotia BaTS II Series 2003-1 to the Trust
in exchange for 40 Bank Preferred Shares Series V and the Scotia BaTS II Series 2003-1
deemed to have been surrendered for exchange will be cancelled.
15. The terms of the Series 2003-1 Bank Exchange Preferred Shares provide that
the Series 2003-1 Bank Exchange Preferred Shares are convertible at the option
of the holder into
Bank Common Shares at certain times and in certain circumstances, except where
an event giving rise to the Series 2003-1 Automatic Exchange in respect of the
Scotia BaTS II
Series 2003-1 has occurred and is continuing (the "Series 2003-1 Bank Common Share
Conversion Right"). The Series 2003-1 Bank Exchange Preferred Shares are
not
convertible into Bank Common Shares until December 31, 2013.
16. In addition, the Bank may redeem the Series 2003-1 Bank Exchange Preferred
Shares and pay the redemption price thereof by delivering cash or Bank Common
Shares to holders of
redeemed Series 2003-1 Bank Exchange Preferred Shares (the entitlement of the
Bank to
issue Bank Common Shares for such purpose being the "Series 2003-1 Bank Preferred
Share Redemption Right").
17. In addition to qualifying the Scotia BaTS II Series 2003-1 for distribution,
the
(final) prospectus in respect of the Offering (the "Prospectus") will also
qualify the Series 2003-1 Holder Exchange Right, the Series 2003-1 Automatic Exchange, the
Series 2003-1 Conversion Rights, the Series 2003-1 Subscription Right, the Series 2003-1
Bank Preferred Share Redemption Right and the Series 2003-1 Bank Common Share Conversion
Right (collectively, the "Series 2003-1 Conversion and Exchange Rights").
Information concerning the Trust and the Bank will be included, or incorporated
by
reference, in the Prospectus.
18. There may be no registration or prospectus exemptions available under the
Legislation for certain of the trades contemplated by the Series 2003-1 Conversion
and Exchange Rights
(the "Trades").
AND WHEREAS pursuant to the System, this MRRS Decision
Document evidences the decision of each of the Decision Makers (collectively,
the "Decision");
AND WHEREAS each of the Decision Makers is satisfied
that the test contained in the Legislation that provides the Decision Maker with the
jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers under the
Legislation is that the Registration Requirement and the Prospectus Requirement
shall not apply to the Trades provided that the first trade in Series 2003-1
Bank Exchange Preferred
Shares and Bank Common Shares acquired pursuant to the Decision, other than a
trade by the Trust or the Bank pursuant to the Series 2003-1 Conversion and Exchange
Rights, shall be
deemed to be a distribution or a primary distribution to the public under the
Legislation
of the Jurisdiction in which the trade takes place (the "Applicable
Legislation") unless:
(a) the Bank has filed and obtained a receipt for the Prospectus under the Applicable Legislation;
(b) the Bank is a reporting issuer or the equivalent under the Applicable Legislation at the time of the trade, to the extent that the Applicable Legislation provides a reporting issuer regime; and
(c) the trade is not a control distribution as defined in Multilateral Instrument 45-102 Resale of Securities.
DATED this 11th day of February, 2003.
H. Leslie O'Brien