:,7
1@-rTE Nrr I @'N MIS-5 SUE THCAA5
C'.',i-' T I 0 \11 !_-aN=RNIN:, I-AAS00 LIMITED'S ADC'LICATMN FOP EVEMPTION
U111-DE R F IRA
ON DECE-01BER 22. 1,080 it44,SCO APPLIED TO THr HON. HERB GRAY,
MINISTER OF INDUSTRY TRADE AND COW. ERCE FOR A MINISTERIAL OPINION
TO THE EFFECT THAT IMASCO 'NAS EXEMPT FROM THE PROVISIONS OF
THF FOREIGN IMIESPCENT REVIEW ACT. THE AOPLICATION WAS BASED
ON THE GROUINDS THAT "DE FACTO" CONTROL OF IMASCO RESTS WTH
THE CO'JPANY'S BOARD OF DIRECTORS AND MANAGEMENT.
A.14UABER OF FAC71ORS DROMPTED THE AE'CLICATIONO AMONG THESE ARE
: THE MANY DIFFICULTIES. LENGTHY DELAYS AND ADDITIONAL COSTS
IMASCO EXPERIENCED IN RE-INVESTING IN CANADA THE APPROXIMATELY
1 00 H I LL I ON DOLLARS 07-R YEAR CURRENTLY AVA I LABLE TO I T FOR NEW
INVESTMENTS. THESE FUNDS ARE EARNED PRIMARILY IN CANADA THROUGH
71@c_ EFFORTS OF SOME 11,000 CANADIANS.
IN FACT. THE COMPANY'S EXPERIENr_C WITH THE UNCERTAINTIES AND
E DELAYS IN THE REVIEW PROCESS OF THE AGENCY AND THIER LM-
31DABLE CONSElUENCES IN THE BUSINESS WORLD HAVE LED IMASCO TO
XNCLUDE THAT IT COULD NOT RELY SOLELY ON RE-INVESTMENT OF ITS
EARNINGS IN CANADA TO MEET ITS GRO!!@PTH TARGETS AND FESPONSIBILITY
TO SHAREHOLDERS.
IN RECENT YEARS, 11AASCO HAS GONE OUTSIDE CANADA AND MADE SIG-
NIFICAN'T INVESTMENTS IN HARDEE'S FOOD SYSTEMS, INC. OF ROCKY
MWIIT, W.C. AID BURGER CHEF SYSTEMS OF INDIANAPOLIS, INr.'IANE.
OUR TOTA-L INVESTMENT IN THESE ENTEPORISES IS OVER 200 MILLION
DOLLAPS.
THIS TEP WAS TAKEN DESPITE IMASCOIS LONG HISTORY OF COKMITMENT
TO CANADA. INDEED. THE PREFERRED COURSE OF THE BOARD OF DIRECTORS
OF THE CO,'-PANY HAS ALWAYS BEEN AND CONTINUES TO BE EXPANSION
h1ITHIN SANADA.
4NOTHER FACTOR PROMPTING; THE COMPANY'S ADPLICATION wA11S DIRECT
FROM. THE HON. HS;P GRAY TO SEEK AN Ex@_@-PTION.
J-
it! JA LE, 1711 I)ATEI) 1)E---A=:4@E,1_A, MR. GPAY_Crj44=_igTV-) AS C,01_061S
10 THE 0--@ESJOENT OF IMASCO:
11 ... THE DE -,= RIM I IA T I ON OF 'NON-ELI-IBILITY' OR ELIGIBILITY
OF ANY @_ORPOPATION DEPENDS UPON THE'ELIGIBILITY OR NON--ELIGISILITY
THE PERSON OR PERSONS WHO IN FACT CONTROL THE CORPORATION. .
AS YOU STATE, IMikSCO JS IN FACT CONTROLLED BY CANADIAISS TWEN
THE CORPORATION IS NOT A INON-ELIGIBLE PERSONt FOR PURPOSES OF
THE ACT. BUT OF COURSE IT IS UP TO NAASCO TO -SHOW, IF CALLED
UPON TO DO SO, THAT THIS 15 INDEED THE CASE."
THE APPLICA11ON FOR A RULING BY THE MINISTER DOCLJME.NTED EYTENSI@oELY
THE COMPANY' S CONTE ISJTI ION THAT I Y.A SCO IS IN' FACT CONTROLLED BY
CAr,ADIA11L5. THE FOLLD.YING APE A NkPABER OF ARGUEMENTS MADE IN
SLPPORT OF HTE COMPANY'S POSITICN:
C:)
__4
BAT Industries document for Province of British Columbia 13 April 1999

L: IQ
@17
4k T I T r
4F:,.a.T. fiELD 8---. DFAZICFI@T 01 PITS TQDAy 12.A.T.
HOLDS 49.8 PE;,:-;:I-jT AND By THE END 07 193-1 IS EXOECTEO TO HOLD
A30PT@XIMATEL%' 40 0EQCFNT.
--- B.A.T. HAS NOT BEEN PEOPESENTED GN MHE BOARD OF OjRrECTCPS OF
VIASCO FCR MORE THAN' 36 YEARS AND THE SA'17- PERICD HAS NOT
H-@D A REPRESENTATIVE ON THE SENIOP NIANAGEMEbri TEAM.
--- LESS THAN )5 PERCENT OF IKASCOIS NET EARNINGS ARE PAID OUT
TO F.A.T. BY t-!AY OF 0011DENDS AND ALL SHAREHOLDERS RECEIVE
IDENTICAL TREATHENT,
-- IMASCO =NPUCTS ITS DWN RES=-API-'H AND DEVELOPIMENT ACTIVITIES
IN CANADA. ITS TOBACCO DIVISION HAS THE LARGEST SELF-CONTAINED
Pr-SEARCH FACILITY IN THE TOBACCO INDUSTRY IN CANADA. FURTHERMORE,
IN ASSOCIATION WITH SHOPPERS DRUG MART AND THE CANADA DEVELOPMENT
CIDRPORATION, THE COMPANY CONDUCTS THE LARGEST INDEPENDENT RE-
SEARCH PROGRA4ME RELATED TO THE PHARMACEUTICAL INDUSTRY IN
CANADA.
-- ]MASCOTS PROCUREMENT POL I CY I S eASED ON US I NG CANAD I AN AATE-
RIALS AND EjUIPMENT WHERE POSSIBLE.
IMASCOIS BANKING RELATIONS, INSURANCE ARRANGEMENTS, CAPITAL
,xPENDITURE PROGRAMMES AND NEW BUSINESS INVESTMENTS A.RE DETER-
MINED BY ITS BOARD OF DIRECTORS AND MANAGEMEENT GROUP.
CONTROL IN ;FACT OF ALL ASPECTS 07 IMASCO RESTS WITH THE
BOARD OF DIRECTORS. EACH DIRECTOR HAS SIGNED AN AFFIDAVIT
ATTESTING TO HIS INDEPENDENT PARTICIPATION IN ALL MATTERS AFFECT-
ING IMASCO. T-HIS MEANS THAT ALL FUNCTIONS OF MANAGEMENT INCLUDING
THE BUSINESS STRATEGIES PURSUED BY IMASCO ARE-THE RESP.ONSIBILITY
OF BOARD 14EMSEPS ACTING AS AUTONOMOUS PERSONIS. NO DIRECTOR OR
OFFIr-'--R OF THE COMPANY IS SUBJECT TO ANY DIRECTION FROM B.A.T.
THERE HAS BEEN NO MATERIAL CHANGE IN ANY OF THE FACTS CONTAINED
IN THE APPLICATION SINCE IT WAS SUB14ITTED TO THE MINISTER. TO
DATE NO ONE IN THE OEPA.RTMENT OR AGENCY HAS QUESTIONED OR CHALLENGED
THESE FACTS IN ANY WAY.
ON SEPTEMBER 18,1981 THE CHAIRMAN AND THE PRESIDENT OF IMASCO
MET WITH THE MINISTER TO REVIE%1 THE STATUS OF IMASCO'S APPLICATION.
AT THIS MEETING THE -MINISTER ExPRESS'M A NUMBER OF CONCERNS ABOUT
)-iE POS17ICKI OF B.A.T IN RELATION TO IMASCO.
FOLI-De.'ING THIS MEETING, IN AN ATTEMPT TO ADDRESS THE ISSUES
,,-1ZAISED BY THE MINISTER. IMASCO, WITH. THE AGREEMENT OF B.A.T MADE
FURTHER PROPOSAL ON NOVEMBER 20. 11081.
THE KEY FEATUQE OF THIS PROPOSAL WAS AN UNDERTAKINC- BY B.A.T TO
LEGALLY BIND ITSELF TO ASSIGN ITS VOTING RIGHTS TO THE CANADIAN
1NON,-ExECLjTIVE1 DIRECTORS OF THE IMASCO BOARD. BECAUSE OF THE
FIDUCIARY RESPONSIBILITY OF THE MEMBERS OF THE BOARD OF DIRECTORS
OF B.A.T TO-ITS SHAREHOLDERS THIS ASSIGM%oENT COULD NOT BE GRANTED
IRREV M-BLY. HOWE"ER, THE PROPOSAL INCLUDED A PROVISION THAT
IF THE ASSIGN@CNT SHOULD 6E REVOKED FOR ANY REASON. ALL TRANSACTIONS
COWLETED BY IKA.SCO IN THE YEARS PRECEEDING THE REVOCATION WOULD
BECOME REVIEv.1ABLE BY THE FOPEIGN INVESTmENT REVIEW AGENCY. THE
7WO YEAR OERIOD !qAS SELECTED BECAUSE MINISTERIAL ExEMPTIONS ARE
WENEWABLE EVERY TWO YEARS.
ON AUGUST 3 1982 IMASCO WAS NOTIFIED THAT ITS OROPOSALS WERE CD
INSUFFICIEN@ TO bABIE THE MINISTER TO RULE IN FAVOUR OF THE
CO,'-PANY.
C=>
CD
BAT Industries document for Province of British Columbia 13 April 1999

:-y T-jjS T@J-,N OF
ic' c7-%NY'S SHAPFHOLOERS ANVE THE NA0141`1 INVESTMENT CO!-TeuNITY
CA I
,;@E FALL Ai,.,Ar%E THAT IAASC0 EELIEVES AN EYEMPTION FROIA THE CONTRAINTS
Oz- THE FOREIGN IN%IESTIwENT RE\IIE,.! ACT IS 1',PCR'tA.NT F'OR THE CO%0PANY15
CC',JTINU7'D GPO@tTH IN CANADA. IN FACT, IN "REVIOuS PUBLIC STATE1,1ENTS,
164M E;E,4DTIO;4 HAS BEEN DESCRIBED AS THE SINGLE MOST IM ORTANT
STRATEGIC FACTOR AFFECTING THEGROwTH OF. IMASCO IN CANADA.
THE MINISTER COULD HAVE CONCLUDED THAT IMASCO WAS CONTROLLED IN
FACT BY CANADIAN'S EVE14 THOUGH THIS CONTROL CO-EXISTS WITH A SIGNI-
FICANT FOREIGN SHAREHOLDING. AS MR. GRAY STATED IN A LETTER HE
WROTE PRIOR TO THE FILING OF THE COMDANYfS APPLICATION, THE KEY
,CRITERION IS THE STATUS_'Or THE PERSON OR DEPSONS WHO IN FACT
CONTROL THE CORPORATION'. ANY REVIEW OF IMASCOIS CORPORATE HISTORY
CLEAPLY SHOt-.15 THAT THE PERSONS WHO IN FACT CONTROL THE CORPORATION
ARE CANADIANS.
MR. GRAY'S UNNILLIN-SNESS, TO RULE IN IMASCOIS FAVOUR AND HIS
CONTINUIWj VIEW OF IAASCO AS A FOREIGN CONTROLLED CORPORATION
NOT ONLY FLIES IN THE FACE OF THE REALITIES OF IMASCOIS PARTICULAR
TUATICN BUT KEEPS IN A KIND CF COPOORATE LIMBO MANY ENTERPRISES
LIKE OUR COUNTRY, WERE FGUNDED AND MATURES WITH HELP FROM
FOREIGN PARENT.
THE MINISTER HAS MISSED AN OPPORTUNITY TO LIBERATE AND FOCUS
THE CREATIVE ECONOMIC ENERGIES OF ALL SUCH CORPORATIONS ON FURTHER
INVESTMENT IN CAI-ADA* THIS AT A TIME OF HIGH INFLATION, HIGH
ILINEMOLOYMENT, HIGH 114MREST RATES AND WHEN THE CANADIAN DOLLAR IS
WAR ITS ALL-TIME LOW:
tHE MINISTER'S DECISION ALSO PUTS IN 4UESTION THE ENTIRE EVOLUTION
OF CORPORATIONS LIKE IMASCO. SUCC-LC-51VE BOARD OF DIRECTORS AND
44NAGEMEN7 TEAMS AT IMASCO HAVE CONVINCED -B.A.T OF HTE IMPORTANCE
AND BENEFITS OF GIVING TO THE MEMBERS OF THE BOARD COMPLETE
AUTONOMY TO DIRECT THE CO'wIMERCIAL DESTIN'Y OF IMASCO AS A CANADIAN
CORPORATION AND ENSURE THA.T IT IS AN ACTIVE, RESPONSIBLE MEMBER
OF THE CANADIAN COK,4LNITY.
IMASCO'S BOARD OF DIRECTORS HAS REAC-HED TWO CONCLUSIONS SINCE
RECEIVING THE MINISTER'S DECISION:
,iRST, DESPITE -DiIS, SET BACK IMAS0C;5 RESOLVE TO INVEST IN CANADA
IS UNDIYINISHIED. THE COMDANY wILL DIRECT ITS EFFORTS n4ARDS ENSURING
AT CHANGES ARE MADE TO THE AC_T SO THAT ISMAY MORE EFFECTIVELY
/_-Z10VIDE ECONOMIC BENEFITS TO ALL CANADIANS.
C:>
BAT Industries document for Province of British Columbia 13 April 1999

Si,: - TC T!-iE FC.-m-7 II A-Z-i Pt_:,C7_5
in @: I
AN'D AAN1,Y OTHER CC.APANIES AT A COMPETITIVE DISACVAN'TAGE
IN TEPMS Or CCSTS AKIO TIVEE FOR MAKIN5 ACIIJISITICH3 IIN CAta!)A.
CONSE'NiENTLYU, IT IS EXPECTED THAT AN 1@60RTANT PORTION OF IMASCO'S
C'ASH FL01Y AIIAILASLE FOR NEEW INVESTMENT IN CANACA IMAY, OF NE.CESSITY.
BE INNESTED OUTSIDE THE COUNTRY.
IT IS WORTH RECORDING THAT IHASCOIS RECENT IM./ESTMENTS IN HARDEE-S
AND BURGER CiriEr REPRESENT AN EXPENDITURE OF OVER 200 MILLION
DOLLARS WHILE TOTAL EXPENDITURES IN THE 4 BUSINESS INVESTMENTS
APPROVED BY THE FOREIGN INVESTMENT REVIEW AGENCY SINCE MARCH 1c,60 TOT
AL ONLY 12 MILLIbN DOLLARS.
THE SECOND CONCLUSION IS THAT THE BASIS ON WHICH FOREIGN INVEST-
MENT IS-CURRENTLY REVIEWED I.S IN MANY INSTANCES CONTRARY TO THE
C01111TRY'S ECONO.'-'.IC INTEREST.
I11%SC0 HAS ALWAYS AGPEED WITH THE CONCEPT THAT GOVERNMENT SHULD
SCREEN FDOREIGN INVES'r#-F-NTS TO ENSURE THAT-THE ECONOMIC NEC-DS
OF CANADA AND CANADIANS ARE WELL PROTECTED. -THE EVOLUTION OF
IMASCO, SINCE 1912 LS EVIDENCE OF THE CO;40ANY'S SELIEC. IN THIS
POLICY. THEREFORE, TO BE PLACED IN THE POSITION OF BEING DENIED
THE STATUS Oc' A CANADIAN CO!-PANY AND FORCED TO LOOK FOR INNESTMENT
,,4:POORTUNITIE.S OUTSIDE OF CANADA FOR THE MONEYS WE EARNED IN CANADA
SH OCK I MG.
iHIS SURELY CANNOT BE THE DESIRED RESULT OF PUBLIC POLICIES
INTENDED TO ENSURE MAXIMIJA BENEFITS. IN CANADA FROM FOREIGN INVEST-
:-ENT.
IMASCO IS DETERMINED TO MAKE ITS EXPERIENCE KNOON TO CANADA'S
LEGISLATORS AND TO ASK THAT THIS UNDESIRABLE SIDE EFFECT BE
REMEDIED WHEN `TiE PARLIAMENT OF CANADA NEXT EXAMINES THE FOREIGN
INVESTMENT REVIEW ACT.
9151,05 BATIND G
1ELLINASC MTL
4'
CD
--4
C:)
BAT Industries document for Province of British Columbia 13 April 1999