As you are aware, Imperial Oil Limited is a public corporation whose common shares trade in both the Canadian (TSX) and U.S. (Amex) securities markets. Imperial has filed various prospectuses with both the SEC and in Canada, with the result that Imperial is subject to both Canadian and U.S. securities laws. In particular, Imperial files a Form 10-K with the SEC in the U.S., and uses this Form 10-K as the basis for its annual disclosure filings with the various provinces in Canada (all 10 of them, with 3 territorial filings as well). As a result, Imperial is very familiar with the securities laws and accompanying compliance requirements on both sides of the border.

The major issue with Canadian securities regulation is there are separate rules and regulators for each province and territory. This makes little sense given the size and nature of the Canadian market. It creates a higher cost structure for Canadian companies as compared to the U.S. which only has one regulator (SEC) and Europe which is rapidly consolidating regulations and regulators.

The experience of Imperial with the SEC is that where significant changes need to be made, it is beneficial to have a single regulatory window with which to deal. As well, the recent filing of our medium term notes prospectus in thirteen jurisdictions in Canada, versus one in the U.S., made the Canadian side of the transaction much more complex and costly. In summary, for improved market efficiency and effectiveness, Imperial Oil would recommend the move to a single securities regulator in Canada.

If the objective of a single securities regulator is not achievable, I note the development of the so-called "passport" system. Under such system, a corporation could satisfy the regulatory requirements of one securities regulator in Canada, and would be entitled to use such approval to satisfy the requirements of all other Canadian securities regulators without any further action. Imperial Oil would view this system as less than ideal, but better than the existing regulatory framework.

In terms of market enforcement, the U.S. Sarbanes Oxley Act (SOX) significantly clarified the rules for fair and accurate reporting and good corporate governance. Imperial, like many other Canadian corporations that file in Canada and the U.S., complies with SOX. In the spirit of adopting best practices and harmonizing North American regulations, we recommend that Canadian regulators adopt SOX.

In terms of your other questions, it is important to note that while some regulations are necessary, a burdensome regulatory system ultimately defeats the efficiency and effectiveness of the market system, and as such, all new regulations should be critically examined on a cost/benefit basis. As well, given Canada competes in North American and global capital markets, harmonization with other regulators based on global best practices should be a key objective. Made for Canada rules typically increase costs and lessen the ability of Canadian companies and capital markets to compete effectively. Whereas, a harmonized set of international regulations create a level playing field for fair competition which is the bedrock of efficient capital markets.

Imperial Oil Ltd.
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