Telus 2009 Annual Report Download - page 10

FOREIGN OWNERSHIP RESTRICTIONS
Certain subsidiaries of TELUS or partnerships in which TELUS has a controlling interest,
are Canadian carriers, holders of radio authorizations or licences, and holders of
broadcasting licences, and are required by the Telecommunications Act (Canada) (the
Telecommunications Act), the Radiocommunication Act (Canada) (the
Radiocommunication Act) and a Direction to the CRTC (Ineligibility of Non-Canadians)
given under the Broadcasting Act (Canada) (the Broadcasting Act) to be Canadian-
owned and controlled. Each of the Canadian carriers, under the Telecommunications
Act, is considered to be Canadian-owned and controlled as long as: (a) not less than 80
per cent of the members of its board of directors are individual Canadians; (b)
Canadians beneficially own not less than 80 per cent of its issued and outstanding voting
shares; and (c) it is not otherwise controlled in fact by persons who are not Canadians.
Substantially the same rules apply under the Radiocommunication Act and the
Broadcasting Act. TELUS has filed with the CRTC the requisite documentation affirming
TCC’s status as a Canadian carrier. TELUS further intends that TCC will remain
controlled by TELUS and that it will ensure that TCC remains “Canadian” for the
purposes of these ownership requirements.
The Canadian Telecommunications Common Carrier Ownership and Control
Regulations (the “Ownership and Control Regulations”), made under the
Telecommunications Act further provide that in order for a company that holds shares in
a carrier to be considered Canadian, not less than 66-2/3 per cent of the issued and
outstanding voting shares of that company must be owned by Canadians and that such
company must not otherwise be controlled in fact by non-Canadians. Accordingly, not
less than 66-2/3 per cent of the issued and outstanding voting shares of TELUS must be
owned by Canadians and TELUS must not otherwise be controlled in fact by non-
Canadians. To the best of TELUS’ knowledge, Canadians beneficially own and control
in the aggregate not less than 66-2/3 per cent of the issued and outstanding Common
Shares of TELUS and TELUS is not otherwise controlled in fact by non-Canadians.
The Ownership and Control Regulations provide Canadian carriers and carrier holding
companies, such as TELUS, with the time and ability to rectify ineligibility resulting from
insufficient Canadian ownership of voting shares. Under the Ownership and Control
Regulations, such companies may restrict the issue, transfer and ownership of shares, if
necessary, to ensure that they and their subsidiaries remain qualified under such
legislation. For such purposes, in particular but without limitation, a company may, in
accordance with the provisions contained in such regulations:
(i) refuse to accept any subscription for any voting shares;
(ii) refuse to allow any transfer of voting shares to be recorded in its share register;
(iii) suspend the rights of a holder of voting shares to vote at a meeting of its
shareholders; and
(iv) sell, repurchase or redeem any voting shares.
To ensure that TELUS remains Canadian and that any subsidiary of TELUS, including
TCC, is and continues to be eligible to operate as a telecommunications common carrier
under the Telecommunications Act, to be issued radio authorizations or radio licences as
a radiocommunications carrier under the Radiocommunication Act, or to be issued
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