SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: C-710-10

DATE: 2014-09-11

RE: Tajdin Abdula, Plaintiff

AND:

Canadian Solar Inc., Shawn Xiaohua Qu and Arthur Chen, Defendants

BEFORE: The Honourable Mr. Justice G. E. Taylor

COUNSEL:
A. Dimitri Lascaris, Douglas Worndl and Anthony O’Brien, Counsel, for the Plaintiff

Bryan Finlay, Q.C., Michael Statham and Anastasija Sumakova, Counsel, for the Defendants

HEARD: July 28, 29, 30, 31 and August 1, 2014

Addendum to

Ruling re Leave to commence statutory cause of action

[1] On September 9, 2009, I released my ruling on the plaintiff’s motion for leave to commence a statutory cause of action pursuant to Part XXIII.1 of the Ontario Securities Act. In that ruling I granted leave with respect to some of the misrepresentations alleged by the plaintiff and dismissed the motion with respect to others of the alleged misrepresentations. Counsel for plaintiff and the defendants have communicated with me to request clarification regarding my ruling.

[2] The letter from counsel which requests the clarification states:

In this regard we are seeking clarification of the Court’s findings with respect to the pleaded misrepresentation in the October 14, 2009 Management’s Discussion and Analysis (“MD&A”) described at paragraphs 34 through 37 of the Fresh as Amended Statement of Claim. This misrepresentation related to Canadian Solar’s revenue recognition policy.

The Reasons describe these misrepresentations at paragraphs 12 and 13. At paragraph 82, the motion is dismissed “… with respect to the alleged misrepresentation relating to revenue recognition in the Canadian Solar’s financial statements for the fiscal year 2008.”

However, the Reasons appear not to determine the issue of the revenue recognition misrepresentation in Canadian Solar’s October 14, 2009 MD&A.

The parties respectfully request clarification on this point.

[3] At paragraph 69 of my ruling, I found that, although it is likely that the internal control in relation to revenue recognition existed at the time of the issuance of Canadian Solar’s Audited Financial Statements for the fiscal year 2008, there was no evidence to base a conclusion that the internal control deficiency pertaining to revenue recognition, standing on its own, was material.

[4] Applying the same reasoning, I conclude that there was likely a deficiency in the internal control in relation to revenue recognition in existence at the time of the October 14, 2009 MD&A, but there is no evidence that that deficiency, by itself, was material.

[5] Therefore, leave is refused and the motion is dismissed with respect to the alleged misrepresentation regarding the internal control in relation to revenue recognition contained in the October 14, 2009 MD&A.

G. E. Taylor J.

Date: September 11, 2014