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Notice 2004-004 - Issuers Trading on Foreign Market

CLARIFICATION � NEW CSA CONTINUOUS DISCLOSURE RULES � ISSUERS TRADING ON FOREIGN MARKETS

As a service to CNQ Issuers and their advisors, CNQ will periodically publish information about initiatives by other regulators that may affect quoted companies. This notice should not be construed as legal advice nor relied upon for compliance with the new rules. Questions concerning this notice should be directed to the company�s legal or financial advisors.

Staff of the Canadian Securities Administrators have issued a notice of frequently asked questions (the �FAQ�) on the new continuous disclosure rules which came into effect on March 30 (see CNQ Notice 2004-003).

Definition of �Venture Issuer�

Under the new rules, issuers that are venture issuers are subject to somewhat less stringent requirements than non-venture issuers. For example, venture issuers are not required to prepare and file an Annual Information Form (AIF) under the new rules. CNQ Issuers are generally venture issuers, but there are some exceptions.

Issuers that have securities listed or quoted on any exchange outside of Canada or the United States are not venture issuers. The FAQ notes that some CSA jurisdictions will be issuing blanket orders treating issuers with securities traded on the Regulated Unofficial Market of the Frankfurt Stock Exchange as venture issuers. Not all jurisdictions have the power to issue blanket rulings; applications for exemptive relief, if desired, will have to be made in those jurisdictions. Applications will also have to be made to all applicable jurisdictions if the issuer�s securities are traded on another foreign market.

Similarly, issuers that have securities listed on a United States stock exchange registered as a �national securities exchange� under the Securities Exchange Act of 1934 are not venture issuers. The FAQ clarifies that the U.S. Over-the-Counter Bulletin Board is not a national securities exchange and thus a CNQ Issuer whose securities are also traded on the OTCBB is a venture issuer (assuming its securities are not also traded on another US or foreign exchange).

Annual Information Forms

Although not required to under the new rules, the FAQ also notes that venture issuers may be required to file an AIF to obtain the benefit of other rules. For example, an AIF must be on file if the issuer wishes to conduct an offering using a short form prospectus.

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