Tribute Pharmaceuticals Canada (SLRXF) DEF 14A Definitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Stellar Pharmaceuticals Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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STELLAR PHARMACEUTICALS INC.

NOTICE OF ANNUAL GENERAL MEETING
AND MANAGEMENT INFORMATION CIRCULAR

May 20, 2009

STELLAR PHARMACEUTICALS INC.

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual general meeting (the "Meeting") of the shareholders ofSTELLAR PHARMACEUTICALS INC. (the "Corporation") will be held at the offices of Stellar Pharmaceuticals. Inc., 544 Egerton St, London, Ontario, on Wednesday, the 17^th day of June, 2009 at the hour of 4:00 p.m. (Toronto time) for the following purposes:

1.

TO RECEIVE the financial statements of the Corporation for the year ended December 31, 2008, together with the report of the auditors thereon;

2.

TO APPOINT auditors of the Corporation for the ensuing year and authorize the directors to fix their remuneration;

3.

TO ELECT directors for the ensuing year;

4.

TO TRANSACT such other business as may properly come before the Meeting.

A shareholder wishing to be represented by proxy at the Meeting or any adjournment thereof must have deposited his duly executed form of proxy not later than 4:00 p.m. (Toronto time) on Monday, June 16, 2008 or, if the Meeting is adjourned, not later than 48 hours, excluding Saturdays, Sundays and holidays, preceding the time of such adjourned Meeting, at the offices of Equity Transfer & Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1.

A form of proxy solicited by management in respect of the Meeting is enclosed herewith. Shareholders who are unable to be personally present at the Meeting are requested to date, sign and return in the envelope provided for that purpose the enclosed form of proxy for use at the Meeting.

DATED at London, Ontario this 20^th day of May, 2009.

BY ORDER OF THE BOARD

"Peter Riehl"

PETER RIEHL

President and Chief Executive Officer

STELLAR PHARMACEUTICALS INC.

MANAGEMENT INFORMATION CIRCULAR

SOLICITATION OF PROXIES

This Management Information Circular is furnished in connection with the solicitation of proxies byor on behalf of management of Stellar Pharmaceuticals Inc.(the "Corporation")for use at the annual general meeting of the shareholders of the Corporation (the "Meeting") to be held at the offices of Stellar Pharmaceuticals Inc., 544 Egerton St, London, Ontario, on Wednesday, the 17^th day of June, 2009, at the hour of 4:00 p.m. (Toronto time) for the purposes set forth in the annexed notice of the Meeting. Unless otherwise noted, all information set forth herein is given as at May 20, 2009. The cost of solicitation by or on behalf of management will be borne by the Corporation. The Corporation may reimburse brokers, custodians, nominees and other fiduciaries for their reasonable charges and expenses incurred in forwarding the proxy material to beneficial owners of co mmon shares. It is expected that such solicitation will be primarily by mail. In addition to solicitation by mail, certain officers, directors and employees of the Corporation may solicit proxies by telephone or personally. These persons will receive no compensation for such solicitation other than their regular salaries.

MANNER IN WHICH PROXIES WILL BE VOTED

The common shares represented by the accompanying form of proxy (if the same is properly executed in favour of Mr. Riehl or Mr. Tenney, the management nominees, and is received at the offices of Equity Transfer & Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1 not later than 4:00 p.m. (Toronto time) on Monday, June 15, 2009, or, if the Meeting is adjourned, not later than 48 hours, excluding Saturdays, Sundays and holidays, preceding the time of such adjourned Meeting) will be voted at the Meeting, and where a choice is specified in respect of any matter to be acted upon, will be voted in accordance with the specifications made.In the absence of such a specification, such shares will be voted in favour of such matter.

The accompanying form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the annexed notice of Meeting, and with respect to other matters which may properly come before the Meeting.At the date hereof, management of the Corporation knows of no such amendments, variations or other matters.

ALTERNATE PROXY

Each shareholder has the right to appoint a person other than the persons named in the accompanying form of proxy, who need not be a shareholder, to attend and act for him and on his behalf at the Meeting.Any shareholder wishing to exercise such right may do so by inserting in the blank space provided in the accompanying form of proxy the name of the person whom such shareholder wishes to appoint as proxy and by duly depositing such proxy, or by duly completing and depositing another proper form of proxy.

REVOCABILITY OF PROXY

A shareholder giving a proxy has the power to revoke it. Such revocation may be made by the shareholder attending the Meeting, duly executing another form of proxy bearing a later date and depositing the same before the specified time, or may be made by written instrument revoking such proxy executed by the shareholder or by his or her attorney authorized in writing and deposited with the Corporation c/o Equity Transfer & Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1 at any time up to and including the close of business on the last business day preceding the day of the Meeting or any adjournment thereof, or with the Chairman of the Meeting on the day of the Meeting or any adjournment thereof or in any other manner permitted by law. If such written instrument is deposited with the Chairman of the Meeting on the day of the Meeting or any adjournment thereof, such instrument will not be effective wit h respect to any matter on which a vote has already been cast pursuant to such proxy.

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ADVICE TO BENEFICIAL HOLDERS OF SECURITIES

The information set forth in this section is of significant importance to many public shareholders of the Corporation, as a substantial number of the public shareholders of the Corporation do not hold common shares in their own names. Shareholders who do not hold their common shares in their own names (referred to in this Management Information Circular as "Beneficial Shareholders") should note that only proxies deposited by shareholders whose names appear on the records of the Corporation as the registered holders of the common shares can be recognized and acted upon at the Meeting. If common shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those common shares will not be registered in the shareholder's name on the records of the Corporation. Such common shares will more likely be registered under the name of the shareholder's broker or an agent of that b roker. In Canada, the vast majority of such common shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). Common shares held by brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers/nominees are prohibited from voting common shares for their clients. The directors and officers of the Corporation do not know for whose benefit the common shares registered in the name of CDS & Co. are held.

Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from Beneficial Shareholders in advance of shareholders' meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided to registered shareholders. However, its purpose is limited to instructing the registered shareholders how to vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ("Broadridge").Broadridge typically applies a decal to the proxy forms, mails those forms to the Beneficia l Shareholders and asks Beneficial Shareholders to return the proxy forms to Broadridge. Broadridge then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of common shares to be represented at the Meeting. A Beneficial Shareholder receiving a proxy with aBroadridge decal on it cannot use that proxy to vote common shares directly at the Meeting. The proxy must be returned to Broadridge well in advance of the Meeting in order to have the common shares voted.

Since the Corporation does not have access to the names of its non-registered shareholders, if a Beneficial Shareholder attends the Meeting, the Corporation will have no record of the Beneficial Shareholder's shareholdings or of its entitlement to vote unless the Beneficial Shareholder's nominee has appointed the Beneficial Shareholder as proxyholder. Therefore, a Beneficial Shareholder who wishes to vote in person at the Meeting must insert its own name in the space provided on the voting instruction form sent to the Beneficial Shareholder by its nominee, and sign and return the voting instruction form by following the signing and returning instructions provided by its nominee. By doing so, the Beneficial Shareholder will be instructing its nominee to appoint the Beneficial Shareholder as proxyholder. The Beneficial Shareholder should not otherwise complete the voting instruction form as its vote will be taken at the Meeting.

INTEREST OF CERTAIN PERSONS AND CORPORATIONS

IN MATTERS TO BE ACTED UPON

No person who has been a director or executive officer of the Corporation since the beginning of the last financial year and no associate or affiliate of any such director or executive officer has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

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VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

As at May 12, 2009, the Corporation had outstanding 23,495,040 common shares, each carrying the right to one vote. The record date for the determination of shareholders entitled to receive notice of the Meeting has been fixed as the close of business on May 12, 2009. In accordance with the provisions of theBusiness Corporations Act (Ontario), the Corporation will prepare a list of holders of common shares on such record date. Each holder of common shares named in the list will be entitled to vote the common shares shown opposite his name on the list at the Meeting except to the extent that (a) the shareholder has transferred any of his common shares after the record date, and (b) the transferee of those common shares produces properly endorsed share certificates or otherwise establishes that he owns such common shares and demands, not later than the close of business on the tenth day before the Meeting, that hi s name be included in the list before the Meeting, in which case the transferee is entitled to vote his common shares at the Meeting.

As of the date hereof, to the knowledge of the directors and senior officers of the Corporation, the following are the only persons beneficially owning, directly or indirectly, or exercising control or direction over, voting securities of the Corporation carrying more than 10% of the voting rights attached to all voting securities of the Corporation:

Name and Municipality of Residence	Type of Ownership	Number of Common Shares	Percentage of Class
Peter Riehl(1) London, Ontario	Beneficial	3,474,741	14.9%
John Gregory(2) Tennessee, U.S.A.	Beneficial	5,188,794	21.9%

Notes:

(1)

Includes 1,690,714 common shares owned by Mr. Riehl's spouse.

(2)

The 5,188,794 common shares are owned by Strategic Investments LLC, a company beneficially owned by Mr. Gregory.

PARTICULARS OF MATTERS TO BE ACTED UPON

(1)

Financial Statements

The shareholders will receive and consider the audited financial statements of the Corporation for the fiscal year ended December 31, 2008 together with the auditor's report thereon.

(2)

Appointment of Auditors

By resolution dated May 11, 2009 the Board of Directors of the Corporation resolved to request the resignation of the Corporation’s then present auditors, Deloitte & Touche LLP. On May 19, 2009 such resignation was provided by Deloitte & Touche LLP. In the May 11, 2009 directors’ resolution the Board of Directors of the Corporation also resolved to appoint McGovern, Hurley, Cunningham LLP, as auditors for the Corporation and on May 20, 2009 McGovern, Hurley, Cunningham LLP accepted such appointment. There are no reportable events or disagreements (as such terms are defined in National Policy Statement No. 31 and National Instrument 51-102 –Continuous Disclosure Obligations of the Canadian Securities Administrators) between the Corporation and Deloitte & Touche LLP, and the reports of Deloitte & Touche LLP on the financial statements of the Corporation for the fiscal years ended December 31, 2008 and 2007, did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

As required by applicable securities law, attached to this Management Proxy Circular as Schedule "A" is the Corporation's reporting package with respect to the change of auditor.

The persons named in the enclosed form of proxy intend to vote the common shares represented by such proxy in favour of a resolution appointing McGovern, Hurley, Cunningham LLP, as auditors of the Corporation, to hold office until the next annual meeting of shareholders and authorizing the directors to fix the remuneration of the auditors, unless the shareholder who has given such proxy has directed that the common shares be withheld from voting in respect of the appointment of auditors.

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(3)

Election of Directors

The articles of the Corporation provide that the number of directors shall be a minimum of one and a maximum of ten and there are currently six directors and six persons are being been proposed for nomination.Unless the authority to do so is withheld, the persons named in the accompanying form of proxy (if the same is duly executed in their favour and is duly deposited) will vote the common shares represented thereby in favour of the election as directors of the persons named below. If prior to the Meeting any vacancies occur in the slate of nominees listed below, unless the authority to do so is withheld, it is intended that discretionary authority shall be exercised to vote the common shares represented by the proxies solicited in respect of the Meeting for the election of such other person or persons as directors in accordance with the best judgment of management. Management is not aware that any of such nominees woul d be unwilling or unable to serve as a director if elected. The information below as to the number of common shares of the Corporation beneficially owned by the proposed nominees, not being within the knowledge of the Corporation, has been furnished by the respective persons individually.

Name, Municipality of Residence and Position and/or Office with the Corporation	Principal Occupation	Period Served as a Director	Common Shares Beneficially Owned, Directly or Indirectly, or Over Which Control or Direction is Exercised*
Peter Riehl London, Ontario President, Chief Executive Officer and Director	President and Chief Executive Officer of the Corporation	Since December 19, 1996	3,474,741(3)
John Kime(1)(2) London, Ontario Director	President, iBD Advisors Inc.	Since November 28, 2000	125,000
Robert Kayser (2) London, Ontario Director	Retired	Since June 29, 2005	Nil
Arnold Tenney(1) Toronto, Ontario Chairman	Financial Consultant at Divine Entertainment Corporation, a children's family film production and development company	Since April 29, 2004	884,200(4)
John Gregory Tennessee, U.S.A. Director	Managing partner of SJ Strategic Investments LLC	Since February 26, 2007	5,188,794(5)
Francis Martin Thrasher(2) London Ontario Director	President of FMT Consulting	Since April 22, 2009	Nil

Notes:

*

Does not include options or other convertible securities.

(1)

Member of the Compensation Committee

(2)

Member of the Audit Committee

(3)

Includes 1,690,714 common shares owned by Mr. Riehl's spouse.

(4)

Includes (i) 672,700 common shares owned by LMT Financial Inc. ("LMT"), a company beneficially owned by Mr. Tenney and his spouse ; (ii) 126,500 common shares owned by Arnmart Investments Limited, a company in which Mr. Tenney holds an equity interest; and (iii) 85,000 common shares owned by Mr. Tenney’s spouse.

(5)

The 5,188,794 common shares are owned by Strategic Investments LLC, a company beneficially owned by Mr. Gregory.

The biographical information for each of the directors other than Mr. Thrasher is contained in prior management information circulars of the Corporation. Mr Thrasher is a seasoned international executive. After graduating from the Richard Ivey School of Business, he spent over 30 years working around the globe for such blue chip companies as General Foods, McCormick & Co, Campbell Soup Co and ConAgra Foods Inc. He lived and worked in Canada, Australia, Belgium and the USA. His responsibilities with Campbell included positions as President, International Grocery and President, North America Grocery. At ConAgra, he was President of the Retail Products Co, a $9 billion business with over 30,000 employees. Currently, Mr. Thrasher is President of FMT Consulting, a boutique advisory and consulting firm.

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Cease Trade Orders and Sanctions

To the best of the Corporation's knowledge, no proposed director of the Corporation is at the date hereof, or within the ten years prior to the date hereof has been, a director, chief executive officer or chief financial officer of any company (including the Corporation) that, while that person was acting in that capacity:

(a)

was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days; or

(b)

was subject to a cease trade order or similar order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

Other than as set forth below, to the best of the Corporation's knowledge, no proposed director of the Corporation is at the date hereof, or within the ten years prior to the date hereof has been, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, other than Mr. Tenney who ceased to be a director in May 2000 of ARC International Corporation which then filed for bankruptcy in October 2000.

Bankruptcies

To the best of the Corporation’s knowledge, no proposed director has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that person other than Mr. Tenney who filed for bankruptcy in June 2002 and who was discharged from such bankruptcy on March 18, 2003.

Penalties and Sanctions

No proposed director has been subject to:

(a)

any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b)

any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for a proposed director.

STATEMENT OF CORPORATE GOVERNANCE MATTERS

Corporate governance relates to the activities of the board of directors (the "Board"), the members of which are elected by and accountable to the shareholders, and accounts for the role of management who are appointed by the Board and charged with the day to day management of the Corporation. The Board and senior management consider good corporate governance to be central to the effective and efficient operation of the Corporation. National Policy 58-201 of the Canadian Securities Administrators has set out a series of guidelines for effective corporate governance (the "Guidelines"). The Guidelines address matters such as the constitution and independence of corporate boards and the effectiveness and education of board members. National Instrument 58-101Disclosure of Corporate Governance Practices("NI 58-101") requires the Corporation to disclose annually in its Manage ment Information Circular certain information concerning its corporate governance practices.

Set out below is a description of the Corporation's approach to corporate governance in relation to the Guidelines.

Board of Directors

NI 58-101 defines an "independent director" as a director who has no direct or indirect material relationship with the Corporation. A "material relationship" is in turn defined as a relationship which could, in the view of the Board, be reasonably expected to interfere with such member's independent judgment. The Board is currently comprised of six members; two members of which, the Board has determined are not "independent" directors within the meaning of NI 58-101 and the remaining four directors are considered to be independent.

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Mr. Riehl is not considered "independent" as the result of his position as the President and Chief Executive Officer of the Corporation. Mr. Tenney is not considered "independent" as the result of consulting fees received by LMT, a company beneficially owned by Mr. Tenney and his spouse. The remaining directors are considered to be independent directors since they are all independent of management and free from any material relationship with the Corporation. The basis for this determination is that, since the beginning of the fiscal year ended December 31, 2008, none of the independent directors have worked for the Corporation, received remuneration from the Corporation or had material contracts with or material interests in the Corporation which could interfere with their ability to act with a view to the best interests of the Corporation.

The Board believes that it functions independently of management. To enhance its ability to act independent of management, the Board may meet in the absence of members of management and the non-independent directors or may excuse such persons from all or a portion of any meeting where a potential conflict of interest arises or where otherwise appropriate. The Board did not hold any meetings of the independent directors during the fiscal year ended December 31, 2008.

Directorships

None of the directors of the Corporation are directors of other reporting issuers (or the equivalent) other than Mr. Gregory who is a director of Adams Golf, Inc.

Orientation and Continuing Education

While the Corporation currently has no formal orientation and education program for new Board members, sufficient information (such as recent annual reports, proxy solicitation materials, various other operating and budget reports and board and committee mandates) is provided to new Board members to ensure that they are familiar with the Corporation's business and the procedures of the Board. In addition, directors are encouraged to visit and meet with management on a regular basis. The Corporation also encourages continuing education of its directors and officers where appropriate in order to ensure that they have the necessary skills and knowledge to meet their respective obligations to the Corporation.

Ethical Business Conduct

Ethical business behaviour is of great importance to the Board and the management of the Corporation. The Corporation has instituted policies on disclosure, insider trading as well as a whistleblower policy for all staff and personnel to report any fraudulent or illegal acts on an anonymous basis directly to the Audit Committee chair.

In addition, if a director of the Corporation also serves as a director and/or officer of another company engaged in similar activities, the Board must comply with the conflict of interest provisions of theBusiness Corporations Act(Ontario), as well as the relevant securities regulatory instruments, in order to ensure that directors exercise independent judgment in considering transactions and agreements in respect of which a director or officer has a material interest. Each director is required to declare the nature and extent of his interest and is not entitled to vote at meetings which involve such conflict.

Nomination of Directors

The Board performs the functions of a nominating committee with responsibility for the appointment and assessment of directors. The Board believes that this is a practical approach at this stage of the Corporation's development.

While there are no specific criteria for Board membership, the Corporation attempts to attract and retain directors with business knowledge, such as accounting and finance, which provide knowledge which assists in guiding management of the Corporation. As such, nominations tend to be the result of recruitment efforts by management of the Corporation and discussions among the directors prior to the consideration of the Board as a whole.

Committees

In addition to the Compensation Committee, the Board also has an Audit Committee. The Audit Committee is currently composed of the following three members: John Kime, Robert Kayser and Marty Thrasher, each of whom are independent directors and each of whom are financially literate. In addition to other duties, the Audit Committee reviews all financial statements, annual and interim, intended for circulation among shareholders and

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reports upon these to the Board. In addition, the Board may refer to the Audit Committee other matters and questions relating to the financial position of the Corporation and its affiliates. There were four meetings of the Audit Committee during 2008. The full text of the Audit Committee's charter is attached as Schedule "B".

Assessments

The Board does not formally review the contribution and effectiveness of the Board, its committees or its members. The Board believes that its size facilitates an informal process of discussion and evaluation.

Audit Committee Member Information

John J. Kime has been a Director of the company since December 2000. Mr. Kime is the President and CEO of iBD Advisors Inc., a privately owned Canadian company providing guidance to Canadian and international companies on site location needs and business considerations connected with their plans to locate and expand in North America. Prior to assuming his responsibilities at iBD Advisors, Mr. Kime was the President and CEO of the London Economic Development Corporation a public/private partnership with responsibility for providing economic development services to the city of London, Ontario, Canada. From 1991 to 1998, Mr. Kime served as Director of International Development for Big ‘O’ Inc., a company engaged in the development of manufacturing technologies used in the control and containment of water, chemicals and other substances. Mr. Kime has a BA from The University of Western Ontario, and is a Chartered Accountant. Mr. Kime’s Chartered Accountant designation and years of experience in economic development qualify him as financially literate for the purposes of National Instrument 52-110.

Robert H. Kayser (Director) founded RHK Consulting in 2001, a company which provides consulting services for medical technology companies. Mr. Kayser has over 29 years experience in the pharmaceutical industry. Mr. Kayser was a former Director of Global Marketing for Medtronic, Inc. from 1997-2001, and served as Vice President, Pacing and Customer Education in Switzerland, where he implemented brand strategies and European customer education activities. Mr. Kayser has a Bachelor of Science diploma from Sir George Williams University. Mr. Kayser's extensive senior management experience and consulting positions and his resulting exposure to financial related matters in businesses similar to those of the Corporation have provided him with the necessary background to qualify as financially literate for the purposes of National Instrument 52-110.

Mr. Thrasher is President of FMT Consulting, a boutique advisory and consulting firm. After graduating from the Richard Ivey School of Business, Mr. Thrasher spent over 30 years working around the globe for such blue chip companies as General Foods, McCormick & Co, Campbell Soup Co. and ConAgra Foods Inc. He lived and worked in Canada, Australia, Belgium and the United States. His responsibilities with Campbell Soup Co. included positions as President, International Grocery and President, North America Grocery. At ConAgra, he was President of the Retail Products Co., a $9 billion business with over 30,000 employees. Mr. Thrasher’s extensive senior management experience and consulting positions and his resulting exposure to financial related matters in businesses similar to those of the Corporation have provided him with the necessary background to qualify as financially literate for the purposes of National Instrument 52-110.

Reliance on Exemptions

During the fiscal year ended December 31, 2008, the Corporation relied on the exemption provided by section 6.1 of NI 52-110 which provides that the Corporation, as a venture issuer, is not required to comply with Part 3 (Composition of the Audit Committee) and Part 5 (Reporting Obligations) of NI 52-110.

Engagement of the Independent Auditor

The Audit Committee is responsible for approving every engagement of the Corporation's external auditor to perform audit or non-audit services for us before the external auditor is engaged to provide those services. Under applicable Securities & Exchange Commission rules, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditors in order to ensure that they do not impair the auditors’ independence. The Commission’s rules specify the types of non-audit services that an independent auditor may not provide to its audit client and establish the Audit Committee’s responsibility for administration of the engagement of the independent auditors.

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Consistent with the Securities & Exchange Commission’s rules, the Audit Committee charter requires that the Audit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent auditors to the Corporation or any of the Corporation's subsidiaries. The Audit Committee may delegate pre-approval authority to a member of the Audit Committee and if it does, the decisions of that member must be presented to the full Audit Committee at its next scheduled meeting.

The Audit Committee’s pre-approval policy provides as follows:

·

First, once a year when the base audit engagement is reviewed and approved, management will identify all other services (including fee ranges) for which management knows it will engage its external auditor for the next 12 months. Those services typically include quarterly reviews, certifications to lenders as required by financing documents, consultation on new accounting and disclosure standards and, in future years, reporting on management’s internal controls assessment.

·

Second, if any new “unlisted” proposed engagement arises during the year, the engagement will require approval of the Audit Committee.

Audit Fees

The following table shows the fees recorded by the Corporation for the audit and other services provided by Deloitte & Touche LLP for the fiscal years ended December 31, 2008 and 2007:

	2008	2007
Audit Fees	$   87,400	$   74,100
Audit-Related Fees	$     7,200	Nil
Tax Fees	Nil	Nil
All Other Fees	$   46,000	$   31,100
Total	$ 142,600	$ 105,200

Audit Fees. Audit fees consist of fees recorded for professional services rendered for the audit of the Corporation’s financial statements and services that are normally provided in connection with statutory and regulatory filings. The aggregate fees recorded by the Corporation for the 2008 and 2007 audit were approximately $87,400 and $74,100, respectively.

Audit-Related Fees. Audit related fees are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Corporation’s consolidated financial statements and are not under “Audit Fees.” Deloitte & Touche LLP billed $7,200 (2007 - $nil) for the year ended December 31, 2008 primarily in connection with review of the Corporation's responses to comment letters from the SEC.

Tax Fees. Tax fees are fees for professional services rendered by our external auditor for tax compliance, tax advice, and tax planning We do not engage our principal accountant to assist with the preparation or review of our annual tax filings. We do, however, engage an outside tax consultant to provide this service. The company did not have any tax filing fees in 2008.

All Other Fees. Fees billed for products and services provided by our external auditor, other than services set forth under the above captions, including the review of the interim financial statements included in quarterly reports and services that are normally provided in connection with statutory and regulatory filings.

STATEMENT OF EXECUTIVE COMPENSATION

Securities law requires that a "Statement of Executive Compensation" in accordance with Form 51-102F6 be included in this Circular. Form 51-102F6 prescribes the disclosure requirements in respect of the compensation of the executive officers and directors of reporting issuers. Form 51-102F6 provides that compensation disclosure must be provided for the Chief Executive Officer and Chief Financial Officer of an issuer and each of the issuer’s three most highly compensated executive officers, other than the Chief Executive Officer and Chief Financial Officer and other than an executive officer whose total salary and bonus does not exceed $150,000. Based on these requirements, the executive officers of the Corporation for whom disclosure is required under Form 51-102F6 are Mr. Peter Riehl (President and Chief Executive Officer of the Corporation) and Ms. Janice M. Clarke (Chief Financial Officer). For the purposes of this section of the Circular, Mr. Riehl and Ms. Clarke shall be referred to as the "Named Executive Officers".

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Compensation Discussion and Analysis

Compensation Philosophy and Objectives

The compensation philosophy of the Corporation is to provide market competitive pay to employees and reward them for their contribution to the operating and financial performance of the Corporation and the success in implementing the Corporation's short-term and long-term strategies.

The objectives of the compensation program are: (i) to attract and retain individuals critical to the success of the Corporation; (ii) to reward performance of individuals by recognizing their contribution to the Corporation; (iii) to align the interests of the Named Executive Officers and the broader management group, with shareholders' interest and the execution of the Corporation's strategic plan; and (iv) to compensate individuals based on their performance and, to the extent applicable, on similar compensation for companies at a comparable stage of development.

Compensation Committee

The Corporation has established a Compensation Committee which is composed of two directors, Arnold Tenney and John Kime, one of whom is independent of management. The Compensation Committee meets no less than once each year and is responsible for making recommendations to the Board regarding:

·

reviewing and approving the compensation and other terms of employment of our Chief Executive Officer;

·

reviewing and approving corporate performance goals and objectives of our executive officers and other senior management; and

·

administration of our stock option plan and other benefit plans and programs.

The Compensation Committee makes recommendations to the Board regarding various other matters, and the Board then determines whether to adopt such recommendations as submitted or otherwise.

The Compensation Committee provides guidance with respect to and the purpose and principles behind the Corporation’s compensation decisions and overall compensation philosophy and objectives, oversee our compensation policies, plans and programs, and reviews and determines executive officer compensation. The Compensation Committee annually evaluates the performance and determines the compensation of the Chief Executive Officer of the Corporation based upon a mix of factors including the achievement of corporate goals, achievement of individual goals, overall individual performance, and comparisons with other companies selected based on size and compensation for talent.

Total Compensation

Total compensation for Named Executive Officers is based on the following components: (i) fixed compensation, which includes base salary and benefits; (ii) performance based compensation, which includes annual and long-term incentives; and (iii) other compensation.

Fixed Compensation

Fixed Compensation includes:

1.

Base Salary

Base salary is determined through formal job evaluation, salary survey data and market comparators. Salary ranges are reviewed annually. Base salaries for all employees are typically increased at contract renewal based on a cost of living factor, such factor being sourced from publicly available salary survey data.

2.

Benefits

Each of the Named Executive Officers and other senior management are enrolled in a benefits plan offering medical, dental, life and long-term disability benefits.

9

Performance Based Compensation

Performance based compensation includes annual and long-term incentives.

1.

Annual Incentives

The Chief Executive Officer's annual incentive is approved by the Compensation Committee and is dependent upon corporate and individual performance, measured against the strategic plan approved by the Board. The annual incentive pay for Ms. Clarke and other senior management is recommended to the Compensation Committee by the Chief Executive Officer based on of corporate, divisional and individual performance measured against the strategic plan.

2.

Long-Term Incentives – Stock Option Plan

The Corporation's stock option plan (the "Stock Option Plan") was adopted to provide the Corporation with a share ownership incentive program to attract, retain and motivate qualified directors, officers, full-time employees and consultants of the Corporation (collectively, "Service Providers"), to reward those Service Providers for their contributions toward the long term goals of the Corporation and enable and encourage such Service Providers to acquire Common Shares as long term investments.

The Stock Option Plan is administered by the Board, and at its option, the Compensation Committee of the Board. Subject to the provisions of the Stock Option Plan, the Board is authorized in its sole discretion to make decisions regarding the administration of the Stock Option Plan. Recommendations for stock options are prepared by Management and presented to the Board for approval. The Board reviews the proposal, the individual or individuals involved and the terms and conditions proposed before approving the recommendations

Summary Compensation Table

				Non-equity incentive plan compensation
Name and principal position	Year	Salary ($)	Option- based awards(1)	Annual incentive plans	Long- term incentive plans	Pension value	All other compensation	Total compensation ($)
Peter Riehl President and Chief Executive Officer	2008	185,000	Nil	Nil	Nil	Nil	Nil	185,000
	2007	175,000	Nil	Nil	Nil	Nil	Nil	175,000
	2006	175,000	Nil	Nil	Nil	Nil	Nil	175,000
Janice M. Clarke Chief Financial Officer and VP of Administration	2008	108,700	$   3,455	Nil	Nil	Nil	Nil	112,155
	2007	99,700	$ 10,535	Nil	Nil	Nil	Nil	110,235
	2006	92,917	Nil	Nil	Nil	Nil	Nil	92,917

Notes:

(1)

Calculated based on the Black-Scholes valuation model at the date of grant. The computation of expected volatility is based on the Corporation’s market close price for the 30 systematic observations over the period equal to the expected life of the options. The computation of expected life is calculated using the simplified method. The dividend yield is 0.0%, since there is no history of paying dividends and there are no plans to pay dividends. The risk-free interest rate is the Canadian Treasury Bond rate for the period equal to the expected term.

10

Incentive Plan Awards

Outstanding Option-Based Awards Outstanding at the end of the Most Recently Completed Financial Year

The below table sets forth information regarding the options held by the Named Executive Officers as at December 31, 2008.

	Option-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price (Cdn$)	Option expiration date	Value of unexercised in-the-money options (Cdn$) (1)
Peter Riehl President and Chief Executive Officer	Nil	Nil	Nil	Nil
Janice M. Clarke Chief Financial Officer and VP of Administration	30,000	.69	June 30, 2010	Nil

Note:

(1)

Calculated using the closing price of the Common Shares on the OTCBB at December 31, 2008 (US$0.27) and a currency exchange rate of $1.2246 US equals Cdn $1.

Incentive Plan Awards – Value Vested or Earned during the Most Recently Completed Financial Year

The incentive plan awards for each of the Named Executive Officers during 2008 is shown in the table below and is comprised of vested stock options vested.

Name	Option-based awards – Value vested during 2008 (Cdn$) (1)	Non-equity incentive plan compensation – Value earned during 2008 (Cdn$)
Peter Riehl President and Chief Executive Officer	Nil	Nil
Janice M. Clarke(2) Chief Financial Officer and VP of Administration	Nil	Nil

Notes:

(1)

Calculated as the aggregate dollar value of options vested during the year that would have been realized if the options under the option-based award had been exercised on the vesting date. All options which vested in the year were out-of-money at the time the options vested.

(2)

In 2008, the Corporation issued 20,000 options to its Chief Financial Officer at an exercise price of $0.50. However, these options were subject to profitability being achieved in 2008. Since profitability in 2008 did not occur, none ofthese options will vest and therefore the incentive value is nil.

Termination and Change of Control Benefits

Peter Riehl, the Corporation's President and Chief Executive Officer is the only officer who currently has an employment agreement with the Corporation. The agreement provides that in the event that Mr. Riehl’s employment is terminated, by the Corporation other than for cause, by Mr. Riehl for good reason or by Mr. Riehl within six months of a change of control of the Corporation, Mr. Riehl is entitled to (i) a lump sum payment equal to 200% of his then current base salary, (ii) all outstanding and accrued regular and vacation pay and expenses and (iii) the immediate vesting of his options which shall continue to be available for exercise for a period of 30 days following the date of termination.

For the purposes of the agreement "good reason" includes the following:(a) a change (other than those that are clearly consistent with a promotion) in the executive's position or duties, responsibilities (including to whom the executive reports and who reports to the executive), title or office, which includes any removal of the executive from or any failure to re-elect or re-appoint the executive to any such positions or offices; (b) a reduction by the Corporation of the executive's salary, benefits or any other form of remuneration or change in the basis upon which the executive's salary, benefits or any other form of remuneration payable by the Corporation is determined or any failure by the Corporation to increase the executive's salary, benefits or other forms of remuneration payable by the Corporation in a manner consistent (both as to frequency and percentage increase) with practices in effect at the time

11

in question with respect to the senior executives of the Corporation; (c) any failure by the Corporation to continue in effect any benefit, bonus, incentive, remuneration or compensation plan, stock option plan, pension plan or retirement plan in which the executive is participating or entitled to participate, or the Corporation taking any action or failing to take any action that would adversely effect the executive's participation in or reduce his rights or benefits under or pursuant to any such plan, where the Corporation failing to increase or improve such rights or benefits on a basis consistent with practices in effect at the time in question with respect to the senior executives of the Corporation; (d) any failure by the Corporation to provide the executive with the number of paid vacation days to which he was entitled at the time in question or the Corporation failing to increase such paid vacation on a basis consistent with practices in effect at the time in question with respect to the senior executives of the Corporation; (e) the Corporation taking any action to deprive the executive of any material fringe benefit not hereinbefore mentioned and enjoyed by him immediately prior to the time in question, or the Corporation failing to increase or improve such material fringe benefits on a basis consistent with practices in effect at the time in question with respect to the senior executives of the Corporation; (f) any breach by the Corporation of any material provision of the agreement; (g) the good faith determination by the executive that constructive dismissal of the executive has occurred; or (h) the failure by the Corporation to obtain, in a form satisfactory to the executive, an effective assumption of its obligations hereunder by any successors to the Corporation, including a successor to a material portion of its business.

For the purposes of the employment agreement a "change of control" means (a) the acquisition or continued ownership of shares of the Corporation and/or securities ("Convertible Securities") convertible into, exchangeable for or representing the right to acquire shares of the Corporation as a result of which a person, group of persons or persons acting jointly or in concert or persons associated or affiliated (within the meanings of theBusiness Corporations Act (Ontario)) with any such person, group of persons or any of such persons acting jointly or in concert (collectively, the "Acquirors") beneficially own shares of the Corporation and/or Convertible Securities such that, assuming only the conversion, exchange or exercise of Convertible Securities beneficially owned by the Acquirors, the Acquirors would beneficially own shares of the Corporation that would entitle the holders thereof to cast more than 50% o f the votes cast attaching to all shares of the Corporation that may be cast to elect members of the Board; and (b) exercise of voting power over all or any such shares of the Corporation so as to cause or result in the election of such number of directors of the Corporation as would constitute a majority of the Board and who were not incumbent directors.

Director Compensation

The following table sets out the total compensation earned by each non-executive director who served in that capacity for any part of the most recently completed financial year:

Name	Fees earned ($)	Option- based awards ($)(2)	All other compensation ($)	Total ($)
John Kime(1)(2)	$ 11,000	Nil	Nil	$ 11,000
Robert Kayser(1)	$ 10,000	Nil	Nil	$ 10,000
John Gregory	$   6,000	Nil	Nil	$   6,000
Arnold Tenney(2)	$ 10,500	Nil	$72,000(3)	$ 82,500

Notes:

(1)

Member of the Audit Committee

(2)

Member of the Compensation Committee

(3)

The Corporation entered into a financial advisory and consulting agreement with LMT, a company beneficially owned by Mr. Arnold Tenney (a director of the Corporation) and his spouse. In consideration for services provided under this agreement, LMT earned a fee of $72,000 (Cdn.) in 2008.

12

Option-based awards

The following table sets out details, as at December 31, 2008, details of options held by each non-executive director who served in that capacity for any part of the most recently completed financial year:

Name	Number of Securities Underlying Unexercised Options (#)	Option Exercise Price (Cdn$)	Option Expiration Date	Value of Unexercised In-the-Money Options (Cdn$)
John Kime	Nil	Nil	Nil	Nil
Robert Kayser	Nil	Nil	Nil	Nil
John Gregory	Nil	Nil	Nil	Nil
Arnold Tenney	Nil	Nil	Nil	Nil

Name	Option-based awards – Value vested during 2008 (Cdn$) (2)	Non-equity incentive plan compensation – Value earned during 2008 (Cdn$) (3)
John Kime	Nil	Nil
Robert Kayser	Nil	Nil
John Gregory	Nil	Nil
Arnold Tenney	Nil	Nil

Equity Compensation Plan Information

Plan Category	Number of securities to be  issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans(excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders	105,000	$0.69	1,874,452
Equity compensation plans not approved by securityholders	Nil	Nil	Nil
Total	105,000	$0.69	1,874,452

INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS

Since the beginning of the last completed financial year and up to May 20, 2009, no director, executive officer or employee or former executive officer, director or employee of the Corporation or any of its subsidiaries was indebted to the Corporation.

DIRECTORS’ AND OFFICERS’ LIABILITY INSURANCE

The Corporation provides insurance for the benefit of the directors and officers of the Corporation against liability incurred by them in these capacities. The current annual policy limit is $2,000,000. Protection is provided to directors and officers for certain wrongful acts or omissions done or committed during the course of their duties as such. Under the policy, the Corporation is reimbursed for payments which it is required or permitted to make to its directors and officers to indemnify them. The current annual premium is $19,440. No claims have been made under the policy.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

Other than as set forth herein, for the fiscal year ended December 31, 2008 and for the period from January 1, 2009 to the date hereof, informed persons of the Corporation, proposed directors and associates and affiliates of any such persons did not have an interest in any transactions or proposed transactions which have materially or would materially affect the Corporation other than as described below.

In February 2008, the Corporation entered into a financial advisory and consulting agreement with LMT, a company beneficially owned by Mr. Arnold Tenney (a director of the Corporation) and his spouse. Mr. Tenney

13

currently serves as Chairman of the Board. In consideration for services provided under this agreement, LMT earned a fee of $72,000 (Cdn.) in 2008. This fee was satisfied in full through 12 monthly payments of $6,000 during 2008. The Corporation has extended this agreement into 2009 on the same terms.

REGISTRAR AND TRANSFER AGENT

Equity Transfer & Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1, is the registrar and transfer agent for the Corporation's common shares.

OTHER BUSINESS

Management of the Corporation knows of no amendment, variation or other matter to come before the Meeting other than those set forth in the Notice of Meeting. If any other matter properly comes before the Meeting, however, the accompanying proxy will be voted on such matter in accordance with the best judgment of the person or persons voting the proxy.

NORMAL COURSE ISSUER BID

Pursuant to a press release dated April 9, 2009 announcing its intention to continue its normal course issuer bid, the Corporation commenced a normal course issuer bid to purchase up to a maximum of 1,175,752 common shares, being approximately 5% of the "public float" of common shares as at April 8, 2009 (the "2009 Bid"). The Corporation believes that the common shares may from time to time trade in a price range that does not adequately reflect the value of such shares in relation to the business of the Corporation and its future business prospects and that the purchase of common shares pursuant to the 2009 Bid will enhance shareholder value. Purchases pursuant to the 2009 Bid will occur on the OTCBB between April 15, 2009 and April 8, 2010 at prices not exceeding the market price of the common shares at the time of acquisition. As at the date hereof, 332,500 common shares hav e been purchased within the previous 12 months pursuant to the 2009 Bid and the previous normal course issuer bid, at average per share cost of $0.36.

ADDITIONAL INFORMATION

Additional information relating to the Corporation can be found on SEDAR at www.sedar.com or SEC at www.sec.com. Financial information is provided in the Corporation's comparative financial statements and management discussion and analysis. Copies of the Corporation’s financial statements and management discussion and analysis may be obtained, without charge, upon request to the Chief Financial Officer at Stellar Pharmaceuticals Inc., 544 Egerton Street, London, Ontario N5W 3Z8; Tel: (519) 434-1540; Fax: (519) 434-4382.

APPROVAL OF DIRECTORS

The contents and the sending of this Management Information Circular have been approved by the directors of the Corporation.

DATED as of the 20^th day of May, 2009.

“Peter Riehl”

PETER RIEHL

President and Chief Executive Officer

14

SCHEDULE "A"

CHANGE OF AUDITOR REPORTING PACKAGE

 

STELLAR PHARMACEUTICALS INC.

May 19, 2009

Ontario Securities Commission	and to
British Columbia Securities Commission	Deloitte & Touche LLP Chartered Accountants
Alberta Securities Commission	("Deloitte")
Securities Exchange Commission
	and to
	McGovern, Hurley, Cunningham, LLP
	Chartered Accountants ("MHC")

Dear Sirs/Mesdames:

RE:NOTICE OF CHANGE OF AUDITOR

In compliance with National Instrument 51-102 –Continuous Disclosure Obligations, and Item 4.01 –Change of Registrant’s Certifying Accountant, please be advised as follows:

1. The former auditor of Stellar Pharmaceuticals Inc. (the “Registrant”), Deloitte & Touche LLP, Chartered Accountants (the “Former Auditor”), has resigned as the independent external auditor of the Registrant effective May 19, 2009 at the Registrant's request.   

2. On May 19, 2009, the Registrant appointed McGovern, Hurley, Cunningham, LLP Chartered Accountants (the “Successor Auditor”) as the Registrant’s independent auditor, with such appointment to be confirmed at the next meeting of shareholders of the Registrant.

3. The reports of Deloitte on the financial statements of the Registrant for the fiscal years ended December 31, 2008 and 2007, and for any period subsequent thereto for which an audit report was issued and preceding the date hereof, did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

4. The decision to request the resignation of the Former Auditor and the appointment of the Successor Auditor was considered and approved by the Audit Committee of the Board of Directors of the Registrant, as well as, the Board of Directors of the Registrant.

5. During the fiscal years ended December 31, 2007 and 2008 and through the date of dismissal of Deloitte, there were no “Reportable Events” within the meaning of National Instrument 51-102 of the Canadian Securities Administrators or Item 304(a)(1)(v) of Regulation S-K of the Securities Exchange Act.

DATED this 19^th day of May, 2009.

ON BEHALF OF THE BOARD OF DIRECTORS

Peter Riehl

President and Chief Executive Officer

A-1

	Deloitte &Touche LLP
	1Concorde Gate
	Suite 200
	Toronto, ON M3C 4G4
	Canada
	Tel: 416-601-6150
	Fax: 416-601-6610
	www.deloitte.ca

May 20,2009

Ontario Securities Commission	and to
British Columbia Securities Commission	McGovem, Hurley, Cunningham, LLP
Alberta Securities Commission	Chartered Accountants
Securities Exchange Commission

Dear Sirs/Mesdames:

Subject:

Stellar Pharmaceuticals Inc.

Notice of Change of Auditor

In compliance with National Instrument 51-102 -Continuous Disclosure Obligations, and Item 4.01 - Change of Registrant's Certifying Accountant, please be advised that we have read the Notice of Change of Auditor prepared by Stellar Pharmaceuticals Inc. dated May 19,2009 and we agree with the contents of the said Notice.

Yours truly,

Chartered Accountants

Licensed Public Accountants

cc: Board of Directors

Member of

Deloitte Touche Tohmatru

A-2

May 20, 2009

Ontario Securities Commission

British Columbia Securities Commission

Alberta Securities Commission

Securities Exchange Commission

Dear Sirs/Mesdames:

Re:

Stellar Pharmaceuticals Inc.

NI 51-102 Notice of Change of Auditor dated May 19, 2009

We have read the above-noted Notice of Change of Auditor with respect to our appointment as the auditor of the Company.  Based on our knowledge of the Company at this date, we agree with the information contained in the Notice of Change of Auditor.

Yours very truly,

McGOVERN, HURLEY, CUNNINGHAM, LLP

Chartered Accountants

Licensed Public Accountants

cc: Stellar Pharmaceuticals Inc.

2005 Sheppard Avenue East, Suite 300, Toronto, Ontario, Canada, M2J 5B4

Telephone: (416) 496-1234 – Fax: (416) 496-0125 – E-mail: infor@mhc-ca.com – Website: www.mhc-ca.com

A-3

SCHEDULE "B"

STELLAR PHARMACEUTICALS INC.

(the "Company")

AUDIT COMMITTEE CHARTER

PURPOSE OF THE COMMITTEE

The purpose of the Audit Committee (the "Committee") of the Board of Directors (the "Board") of the Company is to provide an open avenue of communication between management, the Company's independent auditor and the Board to assist the Board in its oversight of:

·

the integrity, adequacy and timeliness of the Company's financial reporting and disclosure practices;

·

the Company's compliance with legal and regulatory requirements relating to financial reporting; and

·

the independence and performance of the Company's independent auditor.

The Committee shall also perform any other activities consistent with this Charter, the Company's articles and governing laws as the Committee or Board deems necessary or appropriate.

The Committee shall consist of at least three directors. Members of the Committee shall be appointed by the Board and may be removed by the Board in its discretion. The members of the Committee shall elect a Chairman from among their number. All of the members of the Committee must be "independent" and "financially literate" as such terms are defined in National Instrument 52-110 "Audit Committees" (the "Instrument"), subject to the exemptions provided in the Instrument. The quorum for a meeting of the Committee is a majority of the members. With the exception of the foregoing quorum requirement, the Committee may determine its own procedures.

The Committee's role is one of oversight. Management is responsible for preparing the Company's financial statements and other financial information and for the fair presentation of the information set forth in the financial statements in accordance with generally accepted accounting principles ("GAAP"). Management is also responsible for establishing internal controls and procedures for maintaining the appropriate accounting and financial reporting principles and policies designed to ensure compliance with accounting standards and all applicable laws and regulations.

The independent auditor's responsibility is to audit the Company's financial statements and provide its opinion, based on its audit conducted in accordance with generally accepted auditing standards, that the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the Company in accordance with GAAP.

The Committee is responsible for recommending to the Board, the independent auditor to be nominated for the purpose of auditing the Company's financial statements, preparing or issuing an auditor's report or performing other audit, review or attest services for the Company, and for reviewing and recommending the compensation of the independent auditor. The Committee is also directly responsible for the evaluation of and oversight of the work of the independent auditor. The independent auditor shall report directly to the Committee.

B-1

AUTHORITY AND RESPONSIBILITIES

1.

Monitor the adequacy of this Charter and recommend any proposed changes to the Board.

2.

Review the appointments of the Company's Chief Financial Officer and any other key financial executives involved in the financial reporting process.

3.

Review with management and the independent auditor the adequacy and effectiveness of the Company's accounting and financial controls and the adequacy and timeliness of its financial reporting processes.

4.

Review with management and the independent auditor, the annual financial statements and related documents and review with management the unaudited quarterly financial statements and related documents, prior to filing or distribution, including matters required to be reviewed under applicable legal or regulatory requirements.

5.

Where appropriate and prior to release, review with management any news releases that disclose annual or interim financial results or contain other significant financial information that has not previously been released to the public.

6.

Review the Company's financial reporting and accounting standards and principles and significant changes in such standards or principles or in their application, including key accounting decisions affecting the financial statements, alternatives thereto and the rationale for decisions made.

7.

Review the quality and appropriateness of the accounting policies and the clarity of financial information and disclosure practices adopted by the Company, including consideration of the independent auditor's judgment about the quality and appropriateness of the Company's accounting policies. This review may include discussions with the independent auditor without the presence of management.

8.

Review with management and the independent auditor significant related party transactions and potential conflicts of interest.

9.

Pre-approve all non-audit services to be provided to the Company by the independent auditor.

10.

Monitor the independence of the independent auditor by reviewing all relationships between the independent auditor and the Company and all non-audit work performed for the Company by the independent auditor.

11.

Establish and review the Company's procedures for the:

·

receipt, retention and treatment of complaints regarding accounting, financial disclosure, internal controls or auditing matters; and

·

confidential, anonymous submission by employees regarding questionable accounting, auditing and financial reporting and disclosure matters.

12.

Conduct or authorize investigations into any matter that the Committee believes is within the scope of its responsibilities. The Committee has the authority to retain independent counsel, accountants or other advisors to assist it, as it considers necessary, to carry out its duties, and to set and pay the compensation of such advisors at the expense of the Company.

13.

Perform such other functions and exercise such other powers as are prescribed from time to time for the audit committee of a reporting company in Parts 2 and 4 of the Instrument, relevant legislation and the articles of the Company.

B-2

STELLAR PHARMACEUTICALS INC.

May 20, 2009

To Registered and Beneficial Shareholders

Financial Statements Request
In accordance with Canadian securities regulations, both registered and beneficial shareholders may elect annually to receive financial statements, if they so request.  If you wish to receive such mailings, please mark your selection and return this form to Equity Transfer and Trust Company. at the address noted below.
	Interim Financial Statements
Mark this box if you would like to receive interim financial reports by mail.
	Annual Reports
Mark this box if you would like to receive the Annual Report by mail.
If you do not mark the appropriate box, or do not return this card, then it may be assumed you DO NOT want to receive interim and/or annual financial statements.
In accordance with theBusiness Corporations Act (Ontario), ifyou are a registered shareholder who does not wish to receive annual financial statements, you should mark the following box and return this form to Equity Transfer and Trust Company at the address noted below.
	Annual Financial Statements
Mark this box if youdo not wish to receive annual financial statements by mail.

EQUITY TRANSFER & TRUST COMPANY

200 University Avenue, Suite 400

Toronto, Ontario, M5H 4H1

I HEREBY CERTIFY that I am a Shareholder of the Company.
NAME (PLEASE PRINT)
ADDRESS
CITY                                            PROVINCE/ STATE                                             POSTAL / ZIP CODE
COUNTRY	E-MAIL*
	SIGNED:
		(Signature of Shareholder)

THIS IS AN ADDRESS CHANGE  ¨

*If you wish to receive electronic notification of the availability and/or release of information, please register at:

www.equitytransfer.com

STELLAR PHARMACEUTICALS INC.

FORM OF PROXY

FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 17, 2009

The undersigned shareholder ofSTELLAR PHARMACEUTICALS INC. (the "Corporation") hereby appoints Peter Riehl of London, Ontario, the President and Chief Executive Officer of the Corporation, or failing him, Arnold Tenney of Toronto, Ontario, a Director of the Corporation, or instead of either of them,                                                                       , as proxy for the undersigned to attend and vote in respect of all shares registered in the name of the undersigned at the annual meeting of shareholders of the Corporation to be held on June 17, 2009 (the "Meet ing"), and at any adjournment or adjournments thereof, to the same extent and with the same powers if the undersigned were personally present at the Meeting or such adjournment or adjournments thereof and, without limiting the generality of the power hereby conferred, the nominees designated above are specifically directed to vote for or withhold from voting the shares registered in the name of the undersigned as specified below.

1. ELECTION OF DIRECTORS:

TO VOTE "FOR"  ¨       or       TO WITHHOLD VOTE  ¨

in respect of the election of directors;

2.  APPOINTMENT OF AUDITORS:

TO VOTE "FOR"   ¨      or       TO WITHHOLD VOTE  ¨

in respect of the appointment of McGovern, Hurley, Cunningham LLP as auditors of the Corporation and the authorization of the directors to fix their remuneration; and

The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted "For" the matter notified in the proxy by the individuals appointed in the proxy.  

If any amendments or variations to the matters referred to or any other matters identified in the notice of the Meeting are proposed at the Meeting or any adjournment or adjournments thereof, or if any other matters which are not now known to management should properly come before the Meeting or any adjournment or adjournments thereof, this proxy confers discretionary authority on the person voting the proxy to vote on such amendments or variations or such other matters in accordance with the best judgment of such person.  

Any proxy previously given by the undersigned in respect of the Meeting is hereby revoked.

THIS PROXY IS SOLICITED BY MANAGEMENT OF THE CORPORATION.  SHAREHOLDERS HAVE THE RIGHT TO APPOINT A PERSON OTHER THAN THE NOMINEES DESIGNATED ABOVE TO REPRESENT THEM AT THE MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF AND MAY EXERCISE SUCH RIGHT BY INSERTING THE NAME OF THEIR NOMINEE IN THE BLANK SPACE PROVIDED ABOVE FOR THAT PURPOSE.
DATED this	day of	, 2009
Signature of Shareholder
Name of Shareholder (please print)
Notes: 1.   This form of proxy must be signed by the shareholder or his attorney authorized in writing or, if the shareholder is a corporation, an officer or attorney thereof duly authorized. 2.   Please fill in the date on this form of proxy.  If the date is not filled in, this form of proxy shall be deemed to bear the date on which it is mailed. 3.   To be valid, this form of proxy must be signed and deposited with Equity Transfer & Trust Company at its offices at Equity Transfer & Trust Company, 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1, or by fax at (416) 595 9593, not later than 4:00 p.m. (Toronto time) on June 15, 2009 or, if the Meeting is adjourned, not later than 48 hours (excluding Saturdays Sundays and holidays) before the adjourned meeting. 4.   Please see the Information Circular which accompanies this form of proxy for a full explanation of the rights of shareholders regarding completion and use of this form of proxy and other information pertaining to the Meeting.