Total S.A. - MRRS Decision
Headnote
Mutual Reliance Review System for Exemptive Relief Applications -- Securities Act(Ontario), ss. 25 and 53 - Application for relief from the prospectus requirement and the dealer registration requirement in respect of certain trades made in connection with employee share offerings by a French issuer - The offerings involve the use of collective employee shareholding vehicles, a fonds commun de placement d'entreprise (FCPEs) - The issuer cannot rely on the employee exemptions in section 2.24 and 2.28 of National Instrument 45-106 Prospectus and Registration Exemptionsas the shares are not being offered to Canadian participants directly by the issuer, but through the FCPEs - Number of Canadian employees de minimis - Canadian participants will not be induced to participate in the offerings by expectation of employment or continued employment - Canadian participants will receive certain disclosure documents - The FCPEs are subject to the supervision of the French Autorité des marchés financiers -- No market for shares of the issuer in Canada - Relief granted, subject to conditions.
Securities Act(Ontario), s. 25- Application for relief from the dealer registration requirement and adviser registration requirement for the manager of the FCPEs to the extent its activities require compliance - The manager will not be involved in providing advice to Canadian participants and its activities do not affect the underlying value of the shares being offered -- Relief granted in respect of specified activities of the manager, subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74.
National Instrument 45-102 Resale of Securities, s. 2.14.
National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.24, 2.28.
March 6, 2008
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, ONTARIO AND QUÉBEC
(the Jurisdictions)
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
TOTAL S.A.
(the Filer)
MRRS DECISION DOCUMENT
Background
1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for:
(a) an exemption from the prospectus requirements of the Legislation (the Prospectus Relief) so that such requirements do not apply to:
(i) trades in units (Units) of French collective employee shareholding vehicles, Total Actionnariat International Relais 2008 for the Current Employee Offering (as defined below) and other Total Actionnariat International Relais funds for Subsequent Employee Offerings (as defined below) (collectively, the Intermediary Funds and each an Intermediary Fund) which will merge with Total Actionnariat International Capitalisation (the Fund and, together with the Intermediary Funds, the Funds, each a fonds commun de placement d'entreprise or FCPE) made pursuant to a global employee share offering of the Filer (the Current Employee Offering) and subsequent global employee share offerings of the Filer (the Subsequent Employee Offerings) under similar terms (the Current Employee Offering and the Subsequent Employee Offerings collectively, being the Employee Offerings and each an Employee Offering) to or with Qualifying Employees (as defined below) who elect to participate in an Employee Offering (the Canadian Participants);
(ii) trades in Units that occur as a result of the merger of any Intermediary Fund and the Fund whereby the Canadian Participants' Units in an Intermediary Fund are exchanged for Units of the Fund;
(iii) trades in Units that a Canadian Participant receives by virtue of any dividend paid on the shares of the Filer (the Shares) held in the Fund that results in the subsequent issuance of additional Units to a Canadian Participant; and
(iv) trades in Units by the Canadian Participant to the Funds or to trades of Shares by the Funds to Canadian Participants upon the redemption of Units by Canadian Participants;
(b) an exemption from the dealer registration requirements of the Legislation (the Registration Relief) so that such requirements do not apply to:
(i) trades in Units of the Intermediary Funds and the Funds to or with Canadian Participants;
(ii) trades in Units that occur as a result of the merger of any Intermediary Fund and the Fund whereby the Canadian Participants' Units in an Intermediary Fund are exchanged for Units of the Fund;
(iii) trades in Units that a Canadian Participant receives by virtue of any dividend paid on the Shares held in the Fund that results in the subsequent issuance of additional Units to a Canadian Participant; and
(iv) trades in Units by the Canadian Participant to the Funds or to trades of Shares by the Funds to Canadian Participants upon the redemption of Units by Canadian Participants;
(c) an exemption from the adviser registration requirements and dealer registration requirements of the Legislation so that such requirements do not apply to the manager of the Funds, AXA Investment Managers Paris or any subsequent manager (the Manager), to the extent that its activities described in paragraphs 4(q) and 4(r) require compliance with the adviser registration requirements and dealer registration requirement (collectively with the Prospectus Relief and Registration Relief, the Initial Requested Relief); and
(d) an exemption from the dealer registration requirements of the Legislation so that such requirements do not apply to the first trade of any Shares acquired by Canadian Participants under an Employee Offering (the First Trade Relief).
2. Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Alberta Securities Commission is the principal regulator for this application; and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Interpretation
3. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
Representations
4. This decision is based on the following facts represented by the Filer:
(a) The Filer is a corporation formed under the laws of France. The ordinary shares of the Filer are listed on the Euronext Paris Eurolist and on the New York Stock Exchange (in the form of American Depositary Shares). The Filer is not and has no current intention of becoming a reporting issuer (or equivalent) under the Legislation.
(b) The Filer carries on business in Canada through the following affiliated companies: Total E&P Canada Limited, Atotech Canada Ltd., Bostik Canada Ltd., and Total Lubricants Canada (these, together with any other affiliate of the Filer which has employees in Canada, being the Canadian Affiliates and, together with the Filer and other affiliates of the Filer, the Total Group). Each of the Canadian Affiliates is a direct or indirect controlled subsidiary of the Filer and is not, and has no current intention of becoming, a reporting issuer under the Legislation.
(c) Each Employee Offering is reserved for employees of the Filer and the Filer's French and foreign affiliates (including the Canadian Affiliates) in which the Filer directly or indirectly holds at least 50% of the capital, provided that such affiliates participate in Total's Group Shareholding Savings Plan (the Group Savings Plan).
(d) Only employees who are on the payroll of a member company of the Total Group at the start of the subscription period for an Employee Offering and who have been employed for a certain period of time at the closing of the subscription period (the Qualifying Employees) are invited to participate in an Employee Offering.
(e) Currently, there are approximately 306 Qualifying Employees resident in Canada, in the provinces of Québec (approximately 58), Ontario (approximately 58) and Alberta (approximately 190), who represent in aggregate less than 0.25% of the Filer's employees worldwide.
(f) Canadian Participants will not be induced to participate in an Employee Offering by expectation of employment or continued employment. Participation in an Employee Offering is optional. The total amount invested by a Canadian Participant in an Employee Offering cannot exceed a specified percent of his or her estimated gross annual remuneration for the calendar year (currently 25%) in which an Employee Offering is made.
(g) The Funds are collective shareholding vehicles of a type commonly used in France for the conservation of shares held by employee-investors (FCPEs). The Funds are established by a Manager to facilitate the participation of Qualifying Employees in an Employee Offering and to simplify custodial arrangements for such participation (the role of the Manager is described below). The Funds must be registered and approved by the French Autorité des marchés financiers (the French AMF) at the time of their creation. The Funds are not and have no current intention of becoming reporting issuers under the Legislation.
(h) The Funds are intended to provide Qualifying Employees with the opportunity to indirectly hold an investment in the Shares in connection with an Employee Offering. After each Employee Offering, each Fund's portfolio will be exclusively invested in Shares of the Filer and, from time to time, cash in respect of dividends paid on the Shares that will be reinvested in Shares. The Fund's portfolio may also include cash or cash equivalents pending investments in the Shares and for the purposes of Unit redemptions.
(i) Only participants in an Employee Offering are allowed to hold Units of the Funds, and such holdings will be in an amount reflecting the number of Shares held by the Funds on behalf of such Canadian Participants.
(j) Canadian Participants will be invited to participate in an Employee Offering under the following terms:
(i) Canadian Participants will subscribe for and be issued Units of the Intermediary Fund, which will in turn subscribe for Shares on behalf of the Canadian Participants, at a subscription price that is equal to the price calculated as the average of the closing price of the Shares for a specified number of trading days (currently 20) ending on the date preceding the date of approval of an Employee Offering by the board of directors of the Filer (the Reference Price), less a specified discount (currently 20%) to the Reference Price;
(ii) the Shares will be held in the Intermediary Fund and the Canadian Participant will receive Units in the Intermediary Fund;
(iii) while the Shares remain in the Intermediary Fund, any dividends paid on the Shares held in the Intermediary Fund will increase the value of the Units held by Canadian Participants;
(iv) after completion of an Employee Offering, the applicable Intermediary Fund will be merged with the Fund (subject to the Supervisory Board's (as defined below) decision and the French AMF's approval), and the Units of the Intermediary Fund held by Canadian Participants will be exchanged for Units of the Fund and the Shares previously held by the Intermediary Fund will be held in the Fund;
(v) the Units will be subject to a hold period of currently approximately five years (the Lock-Up Period), subject to certain exceptions prescribed by French law (such as a release on death or termination of employment);
(vi) any dividends paid on the Shares held in the Fund and any income and earnings on the assets in the Fund will be reinvested into the Fund (i.e., used to purchase more Shares), and will result in the issuance of additional Units to Canadian Participants;
(vii) at the end of the Lock-Up Period, or in the event of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period prescribed by French law, a Canadian Participant may (i) redeem his or her Units in the Fund in consideration for the Canadian Participant's pro rata portion of the underlying Shares held in the Fund or a cash payment equal to the net asset value of the Units held by Canadian Participant in the Fund, or (ii) continue to hold his or her Units in the Fund and redeem those Units at a later date;
(viii) the Units held by Canadian Participants are not transferable, except (i) when the Units held by Canadian Participants are exchanged when an Intermediary Fund merges with the Fund (as described under paragraph 4(j)(iv) above) and (ii) on the redemption of the Units held by Canadian Participants (as described under paragraph 4(j)(vii) above); and
(ix) the Units issued by the Funds will not be listed on any stock exchange.
(k) Subsequent Employee Offerings of the Filer will be made using an Intermediary Fund currently contemplated to be named Total Actionariat International Relais [Year of Employee Offering] which will also merge into the existing Fund. Subsequent Employee Offerings will be made under the terms as set out herein.
(l) In consideration for their investments, the Canadian Participants will receive a number of Units corresponding to the number of Shares subscribed for on their behalf by the Funds.
(m) The initial value of a Unit of an Intermediary Fund will be approximately equal to the subscription price of a Share under the Employee Offering. The value of a Unit under the Fund will be tied to the market price of the Share, plus or minus 1%. That is, the value of the Units in the Fund should not vary by more than 1% of the Share price, and accordingly, the number of Units will be adjusted to reflect the Share price. The Unit value of the applicable Funds will be based on the net assets of such Fund divided by the number of Units outstanding. However, the number of Units in the Fund will be adjusted on the basis of the market price of the Shares and other assets (cash, in exceptional circumstances) held by the Fund, effective from the first date on which the net asset value is calculated and whenever Shares or other assets are contributed to the Fund, as applicable. Upon such adjustments being made, a holder may be credited with additional Units or fractions of Units.
(n) Subject to the Lock-Up Period (as defined below), the Funds will redeem Units at the request of the Canadian Participants. The Canadian Participant will be paid on the basis of the net asset value of the Fund corresponding to the Canadian Participant's Units, and will be settled by payment in cash or equivalent number of Shares of the Filer.
(o) When a Canadian Participant decides to sell the Shares it has received upon the redemption of the Units held by him or her, it is anticipated that any trades in the Shares held by Canadian Participants will be effected through the facilities of, and in accordance with, the rules of a foreign stock exchange.
(p) Shares issued in the Employee Offering will be deposited in the Funds through a depositary (the Depositary). The current Depositary is BNP Paribas Securities Services. The Depositary carries out orders to purchase, trade and sell securities in the portfolio and takes all necessary action to allow the Funds to exercise the rights relating to the securities held in its portfolio. The Depositary must carry out its activities and undertake all protective measures in carrying out its activities in accordance with French Law.
(q) The Manager is a portfolio management company governed by the laws of France. The Manager is registered with the French AMF to manage French investment funds and complies with the rules of the French AMF. The Manager is not and has no current intention of becoming a reporting issuer under the Legislation, nor is it registered as an adviser or a dealer under any category of registration under the Legislation.
(r) The Manager's portfolio management activities in connection with an Employee Offering and the Funds are limited to purchasing Shares from the Filer and selling such Shares as necessary in order to fund redemption requests. The Manager is also responsible for preparing statements of account to Canadian Participants that indicate the number of Units held by a Canadian Participant in the Funds and that also indicate the end of the Canadian Participant's Lock-Up Period (a Statement of Account). The Manager's activities will in no way affect the underlying value of the Shares. The Manager will not be involved in providing advice to any Canadian Participant.
(s) The management of the Funds is overseen by a supervisory board (the Supervisory Board) comprised of employee Unit holders from the various geographical zones of the Filer and management representatives of the Filer. The Supervisory Board's duties include, among other things, examining the Funds' management report and annual accounts, reviewing major changes in the Funds, and making decisions about the Funds' mergers.
(t) None of the Filer, the Manager, the Canadian Affiliates or any of their employees, agents or representatives will provide investment advice to the Canadian Participants with respect to an investment in the Shares or the Units.
(u) The fees of the statutory auditors, along with the administrative, accounting and financial management fees, will be paid by the Filer; the other charges relating to the Funds such as transaction fees related to the sale and purchase of shares in the Funds will be paid from the Funds' assets.
(v) The Canadian Participants will receive an information package in the French or English language, as applicable, which will include a summary of the terms of the applicable Employee Offering and a description of the relevant Canadian income tax consequences. Canadian Participants may request a copy of the Filer's annual report on Form 20-F filed with the SEC through the Filer's website. The Canadian Participants will also have access to the continuous disclosure materials relating to the Filer furnished to the Filer's shareholders generally through the Filer's website. For example, the following documents will be posted on the Filer's intranet and internet websites: (i) the Filer's reference document and quarterly and half-yearly statements; (ii) the rules and regulations of the "Total Group Savings Plan -- Shareholding"; (iii) the rules and regulations of the Intermediary Fund (as approved by the French AMF); and (iv) the rules and regulations of the Fund. In addition, a copy of the Fund's rules (which are analogous to company by-laws) will be available to Canadian Participants when they receive their application to subscribe for the Units.
(w) Also, each Canadian Participant will receive, at least once a year, a Statement of Account.
(x) As of the date hereof and after giving effect to the Employee Offering, Canadian Participants do not and will not beneficially own more than 10% of the Shares and do not and will not represent in number more than 10% of the total number of holders of the Shares as shown on the books of the Filer.
Decision
5. Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
6. The decision of the Decision Makers under the Legislation is that the Initial Requested Relief is granted provided that:
(a) the first trade in any Shares acquired by Canadian Participants pursuant to this decision, in a Jurisdiction, is deemed a distribution or a primary distribution to the public under the Legislation of such Jurisdiction unless the following conditions are met:
(i) the issuer of the security:
A. was not a reporting issuer in any jurisdiction of Canada at the distribution date; or
B. is not a reporting issuer in any jurisdiction of Canada at the date of the trade;
(ii) at the distribution date, after giving effect to the issuance of the security and any other securities of the same class or series that were issued at the same time as or as part of the same distribution as the security, residents of Canada:
A. did not own directly or indirectly more than 10% of the outstanding securities of the class or series; and
B. did not represent in number more than 10% of the total number of owners directly or indirectly of securities of the class or series; and
(iii) the trade is made:
A. through an exchange, or a market, outside Canada; or
B. to a person or company outside Canada; and
(b) in Québec, the required fees are paid in accordance with Section 271.6(1.1) of the Securities Regulation (Québec).
7. It is the further decision of the Decision Makers under the Legislation that the First Trade Relief is granted provided that the conditions set out in paragraphs (6)(a)(i), (ii) and (iii) above are satisfied.
8. It is also a decision of the Decision Makers under the Legislation that the Initial Requested Relief and the First Trade Relief will apply to Subsequent Employee Offerings provided that the representations in paragraphs 4(d), (f), (g), (i), (j), (k) and (n) through (x) inclusive are true and correct, and the conditions set out in paragraphs 6 and 7 are satisfied, as of the date of such Subsequent Employee Offerings.