General Mills, Inc. - MRRS Decision
Headnote
MRRS- registration and prospectus relief for issuance of sharesby foreign issuer to Canadian employees, officers and directorsunder option and incentive plans - issuer bid relief for foreignissuer in connection with acquisition of shares under optionand incentive plans.
ApplicableOntario Statutory Provisions
SecuritiesAct, R.S.O. 1990, c.S.5, as am., s. 25, 35(1)(1), 35(1)(12)(iii),35(1)(17), 53, 72(1)(f)(iii), 72(1)(k), 74(1), 89(1), 93(3)(d),104(2)(c).
RegulationsCited
Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015, as am.,s. 182(1), 183,203.1(1)(b)(ii), 204, 206.
RulesCited
OSCRule 45-503 - Employee Exemption - ss. 2.2 to 2.4, 3.5.
OSCRule 72-501 - Prospectus Exemption from First Trade Over a MarketOutside Ontario.
INTHE MATTER OF
THESECURITIES LEGISLATION OF
ONTARIO,BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA,NEW BRUNSWICK AND NOVA SCOTIA
AND
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW
SYSTEMFOR EXEMPTIVE RELIEF APPLICATIONS
ANDIN THE MATTER OF
GENERALMILLS, INC.
MRRSDECISION DOCUMENT
WHEREASthe local securities regulatory authority or regulator (the"Decision-Maker") in each of Ontario, BritishColumbia, Alberta, Saskatchewan, Manitoba, New Brunswick andNova Scotia (the "Jurisdictions") has receivedan application from General Mills, Inc. ("General Mills"or the "Company") for a decision pursuant tothe securities legislation of the Jurisdictions (the "Legislation")that:
(i) the requirements contained in the Legislation to be registeredto trade in a security and to file and obtain a receipt fora preliminary prospectus and a prospectus (the "Registrationand Prospectus Requirements") shall not apply to certaintrades in shares of General Mills common stock (the "Shares")made in connection with the General Mills, Inc. 1998 EmployeeStock Plan (the "1998 Stock Plan"); and
(ii) the requirements contained in the Legislation relatingto the delivery of an offer and issuer bid circular and anynotices of change or variation thereto, minimum deposit periodsand withdrawal rights, taking up and paying for securities tenderedto an issuer bid, disclosure, restrictions upon purchases ofsecurities, bid financing, identical consideration and collateralbenefits together with the requirement to file a reporting formwithin 10 days of an exempt issuer bid and pay a related fee(the "Issuer Bid Requirements") shall not applyto certain acquisitions by General Mills of Shares pursuantto the 1998 Stock Plan in the Jurisdictions.
ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
ANDWHEREAS General Mills has represented to the Decision-Makersas follows:
1.General Mills is presently a corporation incorporated underthe laws of the state of Delaware. The executive offices ofGeneral Mills are located in Minneapolis, Minnesota.
2.The Company is registered with the Securities Exchange Commission("SEC") in the United States under the SecuritiesExchange Act of 1934 (the "Exchange Act")and is not exempt from the reporting requirements of the ExchangeAct pursuant to Rule 12G 3-2 made thereunder.
3.General Mills is not a reporting issuer in any Jurisdictionand has no present intention of becoming a reporting issuerin any Jurisdiction. The majority of the directors and seniorofficers of General Mills reside outside of Canada.
4.The authorized share capital of General Mills consists of onebillion Shares and 5 million shares of preferred stock (the"Preferred Shares"). As of September 25, 2001,there were 285,295,585 Shares and no Preferred Shares issuedand outstanding.
5.The Shares are listed on the New York Stock Exchange ("NYSE").
6.The purpose of the 1998 Stock Plan is to attract and retainable employees by rewarding employees of General Mills and itsaffiliates (the "General Mills Companies")and to align the interests of employees with thoseof the stockholders of the Company through compensation thatis based on the value of the Company's Shares.
7.Under the 1998 Stock Plan, options exercisable for Shares (the"Options") may be granted to employees of theGeneral Mills Companies (the "Participants").The 1998 Stock Plan also provides for the grant of restrictedstock and restricted stock units but the General Mills Companiesdo not currently intend to make these available to their Canadianemployees.
8.Employees who participate in the 1998 Stock Plan will not beinduced to purchase Shares by expectation of employment or continuedemployment.
9.The 1998 Stock Plan is administered by the board of directors(the "Board") of the Company and/or a committeeappointed by the Board.
10.As of September 25, 2001, there were 1400 Participants in Canadaeligible to receive Options under the 1998 Stock Plan: 848 inOntario; 50 in British Columbia; 67 in Alberta; 3 in Saskatchewan;82 in Manitoba; 339 in Quebec; 3 in New Brunswick; and 8 inNova Scotia.
11.Following the termination of a Participant's relationship withthe General Mills Companies for reasons of disability, retirement,"change of control", "spin-off" or any other reason (collectively,the "Former Participants") and on the deathof a Participant, where the Option has been transferred by willor pursuant to the laws of intestacy (collectively, the "PermittedTransferees"), the Former Participants and PermittedTransferees will continue to have rights in respect of the 1998Stock Plan ("Post-Termination Rights"). Post-TerminationRights may include, among other things, the right of a FormerParticipant to exercise an Option for a period determined inaccordance with the 1998 Stock Plan following termination andthe right to sell Shares acquired under the 1998 Stock Planthrough the Agent.
12.General Mills may use the services of one or more agents/brokers(collectively, "Agents" and, individually,an "Agent") under the 1998 Stock Plan. Thecurrent Agent for the 1998 Stock Plan is Wells Fargo Stock OptionsServices, Inc. The current Agent is, and if replaced, or ifadditional Agents are appointed, will be registered under applicableUnited States securities or banking legislation and has beenor will be authorized by General Mills to provide services underthe 1998 Stock Plan. The current Agent is not registered toconduct retail trades in any of the Jurisdictions and, if replaced,or if additional Agents are appointed, is not expected to beso registered in any of the Jurisdictions.
13.The Agent's role in the 1998 Stock Plan may include (a) assistingwith the administration of the 1998 Stock Plan, including record-keepingfunctions; (b) facilitating the exercise of Options grantedunder the 1998 Stock Plan (including cashless and stock-swapexercises) to the extent that they are exercisable for Shares;(c) holding Shares issued under the 1998 Stock Plan on behalfof Participants, Former Participants and Permitted Transferees;and (d) facilitating the resale of the Shares issued in connectionwith the 1998 Stock Plan.
14.As there is no market for the Shares in Canada and none is expectedto develop, it is expected that the resale by Participants,Former Participants and Permitted Transferees of the Sharesacquired under the 1998 Stock Plan will be effected throughthe NYSE.
15.The sale of Shares acquired under the 1998 Stock Plan may bemade by Participants, Former Participants or Permitted Transfereesthrough the Agent.
16.As at September 25, 2001, Canadian shareholders did not hold,directly or indirectly, more than 10% of the issued and outstandingShares of the Company and do not constitute more than 10% ofthe shareholders of the Company. If at any time during the currencyof the 1998 Stock Plan Canadian shareholders of the Companyhold, in aggregate, greater than 10% of the total number ofissued and outstanding Shares or if such shareholders constitutemore than 10% of all shareholders of the Company, the Companywill apply to the relevant Jurisdiction for an order with respectto further trades to and by Participants, Former Participantsand Permitted Transferees in that Jurisdiction in respect ofShares acquired under the 1998 Stock Plan.
17.All necessary securities filings have been made in the UnitedStates in order to offer the 1998 Stock Plan to Participantsof the General Mills Companies resident in the United States.
18.A prospectus prepared according to United States' securitieslaws describing the terms and conditions of the 1998 Stock Planwill be delivered to each employee who is granted an Optionunder the 1998 Stock Plan. The annual reports, proxy materialsand other materials General Mills is required to file with theSEC will be provided or made available to Participants residentin Canada at the same time and in the same manner as the documentsare provided or made available to Participants resident in theUnited States.
19.Pursuant to the 1998 Stock Plan, the acquisition of Shares bythe Company in certain circumstances may constitute an "issuerbid". The terms of the 1998 Stock Plan permit Option holdersto surrender Shares to the Company on a stock-swap exercise.The exemptions in the Legislation from the Issuer Bid Requirementsmay not be available for such acquisitions by the Company sincesuch acquisitions may occur at a price that is not calculatedin accordance with the "market price," as that term is definedin the Legislation, and may be made from persons other thanemployees or former employees.
20.The Legislation of certain of the Jurisdictions does not containexemptions from the Prospectus and Registration Requirementsfor all the intended trades in Options and Shares under the1998 Stock Plan.
21.When the Agent sells Shares on behalf of Participants, FormerParticipants and Permitted Transferees, the Agent, Participants,Former Participants and Permitted Transferees may not be ableto rely upon the exemptions from the Registration and ProspectusRequirements contained in the Legislation of certain of theJurisdictions.
ANDWHEREAS pursuant to the System, this Decision Documentevidences the decision of each Decision-Maker (collectively,the "Decision");
ANDWHEREAS each of the Decision-Makers is satisfied thatthe test contained in the Legislation that provides the Decision-Makerwith the jurisdiction to make the Decision has been met;
THEDECISION of the Decision-Makers pursuant to the Legislationis that:
(i) the Registration and Prospectus Requirements shall not applyto any trade or distribution of Options or Shares made in connectionwith the 1998 Stock Plan, including trades and distributionsinvolving the Agent, Participants, Former Participants, andPermitted Transferees, provided that the first trade in Sharesacquired pursuant to this Decision in a Jurisdiction shall bedeemed a primary distribution to the public under the Legislationof such Jurisdiction unless the conditions in section 2.14(1)of Ml 45-102 Resale of Securities are satisfied;
(ii) the first trade by Participants, Former Participants orPermitted Transferees, in Shares acquired pursuant to the 1998Stock Plan, including first trades effected through the Agent,shall not be subject to the Registration and Prospectus Requirements,provided such first trade is executed through a stock exchangeor market outside of Canada; and
(iii) the Issuer Bid Requirements of the Legislation shall notapply to the acquisition by General Mills of Shares from Participants,Former Participants or Permitted Transferees provided such acquisitionsare made in accordance with the terms of the 1998 Stock Plan.
January9, 2002.
"PaulMoore" "Robert W. Korthals"