Stellantis N.V.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the prospectus and registration requirements for certain trades made in connection with an employee share offering by a Netherlands-based issuer -- the issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions as the securities are not being offered to Canadian employees directly by the issuer but rather through special purpose entities -- Canadian participants will receive disclosure documents -- the special purpose entities or FCPEs are subject to the supervision of the local securities regulator -- Canadian employees will not be induced to participate in the offering by expectation of employment or continued employment -- there is no market for the securities of the issuer in Canada -- the number of Canadian participants and their share ownership are de minimis -- relief granted, subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53 and 74(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.
National Instrument 45-106 Prospectus Exemptions.
National Instrument 45-102 Resale of Securities.
Ontario Securities Commission Rule 72-503 Distributions Outside Canada.
May 9, 2024
IN THE MATTER OF
THE SECURITIES LEGISLATION OF ONTARIO
(the Jurisdiction)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
STELLANTIS N.V.
(the Filer)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) for:
1. an exemption from the prospectus requirement (the Prospectus Relief) so that such requirement does not apply to:
(a) trades of:
(i) units (the Principal Classic Units) of a fonds commun de placement d'entreprise or "FCPE", a form of collective shareholding vehicle commonly used in France for the custody of shares held by employee-investors, named "Stellantis International" (the Principal Classic Fund);
(ii) units (the 2024 Units) of a temporary fund (the 2024 Fund) intended to merge into the Principal Classic Fund; and
(iii) units (the Temporary Classic Units, and together with the Principal Classic Units and the 2024 Units, the Units) of future temporary FCPEs established for Subsequent Employee Offerings (as defined below) (together with the 2024 Fund, the Temporary Classic Funds, and together with the Principal Classic Fund, the Funds);
made pursuant to an Employee Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdictions (as defined below) (collectively, the Canadian Employees, and Canadian Employees who subscribe for Units, the Canadian Participants); and
(b) trades of ordinary shares of the Filer (the Shares) by the Classic Fund to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants (the term "Classic Fund" used herein means, prior to the Merger (as defined below), the applicable Temporary Classic Fund and following the Merger, the Principal Classic Fund); and
2. an exemption from the dealer registration requirement (the Registration Relief, and together with the Prospectus Relief, the Exemption Sought) so that such requirement does not apply to the Filer and its Local Related Entities (as defined below), the Classic Fund and Natixis Investment Managers International (the Management Company) in respect of:
(a) trades in Units made pursuant to an Employee Offering to or with Canadian Employees; and
(b) trades in Shares by the Classic Fund to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Québec, Alberta, British Columbia, Manitoba and Nova Scotia (together with the Jurisdiction, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions, MI 11-102 and National Instrument 45-106 Prospectus Exemptions (NI 45-106) have the same meaning as used in this decision, unless otherwise defined.
"Related entity" has the same meaning given to such term in section 2.22 of NI 45-106.
Representations
This decision is based on the following facts represented by the Filer:
3. The Filer is a corporation formed under the laws of the Netherlands. It is not, and has no current intention of becoming, a reporting issuer under the securities legislation of any jurisdiction of Canada. The head office of the Filer is located in the Netherlands and the Shares are listed on Euronext Paris, Euronext Milan and on the New York Stock Exchange. The Filer is not in default of securities legislation of any jurisdiction of Canada.
4. The Filer has established a global employee share offering (the 2024 Employee Offering) and expects to establish subsequent global employee share offerings following 2024 for the next four years that are substantially similar (Subsequent Employee Offerings, and together with the 2024 Employee Offering, the Employee Offerings) for Qualifying Employees and its participating related entities, including related entities that employ Canadian Employees (Local Related Entities, and together with the Filer and other related entities of the Filer, the Stellantis Group). Each Local Related Entity is a direct or indirect controlled subsidiary of the Filer and no Local Related Entity is a reporting issuer nor has any current intention of becoming a reporting issuer under the securities legislation of any jurisdiction of Canada. The head office of the Stellantis Group in Canada is located in Ontario and the greatest number of employees in the Stellantis Group in Canada reside in Ontario.
5. As of the date hereof, FCA Canada Inc. is the only "Local Related Entity". For any Subsequent Employee Offering, the list of Local Related Entities may change.
6. As of the date hereof and after giving effect to any Employee Offering, the Filer is and will be a "foreign issuer" as such term is defined in section 2.15(1) of National Instrument 45-102 Resale of Securities (NI 45-102), section 2.8(1) of Ontario Securities Commission Rule 72-503 Distributions Outside Canada (OSC Rule 72-503), and section 11(1) of Alberta Securities Commission Rule 72-501 --Distributions to Purchasers Outside Alberta (ASC Rule 72-501).
7. The 2024 Employee Offering involves an offering of Shares to be acquired through the Temporary Classic Funds which will merge with the Principal Classic Fund following the capital increase, subject to the approval of the Funds' Supervisory Board and the Autorité des marchés financiers in France (the French AMF).
8. Each Subsequent Employee Offering will involve an offering of Shares to be subscribed through a Temporary Classic Fund, which will be merged with the Principal Classic Fund following completion of the Subsequent Employee Offering (the Classic Plan, which for greater certainty, includes the 2024 Employee Offering), subject to the decision of the supervisory boards of the Funds and the approval of the French AMF.
9. Only persons who are employees of an entity forming part of the Stellantis Group during the subscription period for an Employee Offering and who meet other employment criteria (the Qualifying Employees) will be allowed to participate in the relevant Employee Offering.
10. The 2024 Fund was established for the purpose of implementing the 2024 Employee Offering. The Principal Classic Fund was established for the purpose of implementing the Employee Offering generally. There is no current intention for the Principal Classic Fund to become a reporting issuer under the securities legislation of any jurisdiction of Canada. There is no current intention for any Temporary Classic Fund that will be established for the purpose of implementing Subsequent Employee Offerings to become a reporting issuer under the securities legislation of any jurisdiction of Canada.
11. The Temporary Classic Fund was registered with, and has been approved by, the French AMF, as of February 21, 2024. It is expected that each Temporary Classic Fund established for Subsequent Employee Offerings will be a French FCPE and will be registered with, and approved by, the French AMF.
12. The total amount that may be invested by a Canadian Employee pursuant to an Employee Offering cannot exceed 25% of his or her gross annual compensation. The value of the Matching Contribution (as defined below) is not included in this calculation.
13. Under the Classic Plan, each Employee Offering will be made as follows:
(a) Canadian Participants will subscribe for Units in the relevant Temporary Classic Fund, which will subscribe for Shares on behalf of Canadian Participants using the Canadian Participants' contributions and the Matching Contribution, at a subscription price that is the Canadian dollar equivalent of the average opening price of the Shares (expressed in Euros) on Euronext Paris for the 20 trading days preceding the date of the fixing of the subscription price (the Reference Price), less a specified discount to the Reference Price (e.g., 20% for the 2024 Employee Offering).
(b) The Shares subscribed for will be held in the relevant Temporary Classic Fund and the Canadian Participants will receive Units in the relevant Temporary Classic Fund for the Shares subscribed for.
(c) After completion of an Employee Offering, the relevant Temporary Classic Fund will be merged with the Principal Classic Fund (subject to the approval of the supervisory board of the FCPE and the French AMF). Units of the relevant Temporary Classic Fund held by Canadian Participants will be replaced with Units of the Principal Classic Fund on a pro rata basis and the Shares subscribed for will be held in the Principal Classic Fund (the Merger). The Merger is made by the transfer of all assets held in the Temporary Classic Fund into the Principal Classic Fund and the liquidation of the Temporary Classic Funds after such transfer.
(d) The Units will be subject to a hold period of approximately three years (the Lock-Up Period), subject to certain exceptions provided for under French law (such as release on death, disability or termination of employment).
(e) Any dividends paid on the Shares held in the Funds will be contributed to the Fund and used to purchase additional Shares, and additional Units (or fractions thereof) will be issued to the Canadian Participants to reflect this reinvestment.
(f) At the end of the relevant Lock-Up Period, a Canadian Participant may (i) request the redemption of his or her Units in the Fund in consideration for a cash payment equal to the then market value of the Shares, or (ii) continue to hold his or her Units in the Fund and request the redemption of those Units at a later date in consideration for the underlying Shares or a cash payment equal to the then market value of the Shares.
(g) In the event of an early exit resulting from a Canadian Participant exercising one of the exceptions to the Lock-Up Period and meeting the applicable criteria, the Canadian Participant may request the redemption of Units in the Fund in consideration for a cash payment equal to the then market value of the Shares.
(h) The Local Related Entity employing a Canadian Participant will also contribute an additional amount on behalf of such Canadian Participant (the Matching Contribution).
(i) For the 2024 Employee Offering, the Matching Contribution will be calculated as follows: for each contribution that a Canadian Participant makes up to the Canadian dollar equivalent of £1,000, the Local Related Entity employing such Canadian Participant will contribute an additional 100% of such amount into the Classic Plan on behalf of such Canadian Participant. For each Subsequent Employee Offering, the Matching Contribution rules may change.
14. Under French law, an FCPE is a limited liability entity. The portfolio of the Funds will consist almost entirely of Shares, but may, from time to time, also include cash in respect of dividends paid on the Shares which will be reinvested in Shares and cash or cash equivalents pending investments in Shares and for the purposes of Unit redemptions.
15. The Funds are managed by the Management Company, which is a portfolio management company governed by the laws of France. The Management Company is registered with the French AMF as an investment manager and complies with the rules of the French AMF. The Management Company is not, and has no current intention of becoming, a reporting issuer under the securities legislation of any jurisdiction of Canada. For any Subsequent Employee Offering, the "Management Company" may change. In the event of such a change, the successor to the Management Company will comply with the terms and conditions described in this paragraph.
16. The Management Company's portfolio management activities in connection with an Employee Offering and the Funds are limited to subscribing for Shares, selling such Shares as necessary in order to fund redemption requests and investing available cash in cash equivalents.
17. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents of the Funds. The Management Company's activities will not affect the underlying value of the Shares.
18. None of the entities forming part of the Stellantis Group, the Funds or the Management Company, or any of their directors, officers, employees, agents or representatives will provide investment advice to Canadian Employees with respect to an investment in Shares or Units.
19. None of the entities forming part of the Stellantis Group, the Funds or the Management Company is currently in default of securities legislation of any jurisdiction of Canada.
20. Shares issued pursuant to an Employee Offering will be deposited in the Fund through CACEIS Bank (the Depositary), a large French commercial bank subject to French banking legislation. For any Subsequent Employee Offering, the "Depositary" may change. In the event of such a change, the successor to the Depositary will remain a large French commercial bank subject to French banking legislation. The Depositary carries out orders to purchase, trade and sell securities in the portfolio and takes all necessary action to allow the Classic Fund to exercise the rights relating to the securities held in their portfolio.
21. The Management Company and the Depositary are obliged to act exclusively in the best interests of the holders of the Units (including Canadian Participants) and are jointly and severally liable to them under French legislation for any violation of the rules and regulations governing FCPEs, any violation of the rules of the Funds, or for any self-dealing or negligence.
22. Participation in an Employee Offering is voluntary, and Canadian Employees will not be induced to participate in an Employee Offering by expectation of employment or continued employment.
23. The Unit value of the Fund will be calculated and reported to the French AMF on a regular basis, based on the net assets of the Fund divided by the number of Units outstanding. The value of the Units will be based on the value of the underlying Shares.
24. The Shares and Units are not currently listed for trading on any stock exchange in Canada and there is no intention to have the Shares or the Units so listed.
25. All management charges relating to the Fund will be paid from the assets of the Fund or by the Filer, as provided in the rules of the Fund.
26. Canadian Employees will receive an information package in the French or English language, according to their preference, which will include a summary of the terms of the relevant Employee Offering and a description of the relevant Canadian income tax consequences of subscribing for and holding Units of the Fund and requesting the redemption of such Units at the end of the applicable Lock-Up Period. Canadian Employees will also have access to the Filer's Annual Report and other documents filed with the relevant authorities, such as the Form 20-F filed with the U.S. Securities and Exchange Commission and a copy of the rules of the relevant Temporary Classic Fund and the Principal Classic Fund. Canadian Employees will also have access to the continuous disclosure materials relating to the Filer that are furnished to holders of the Shares generally and that are available on the Filer's website. Canadian Participants will receive an initial statement of their holdings under the Classic Plan, together with an updated statement, at least once per year.
27. As at March 11, 2024, there are approximately 7,185 Qualifying Employees resident in Canada, with the greatest number resident in Ontario (7,121), and the remainder in the provinces of Québec (15), Alberta (46), British Columbia (1), Manitoba (1) and Nova Scotia (1), who represent, in the aggregate, approximately 3.7% of the number of Qualifying Employees in the Stellantis Group worldwide.
28. Each Employee Share Offering will be made under the terms as set out herein and for greater certainty, all of the representations will be true for each Employee Share Offering other than paragraphs 5, 13(i) and 27 which may change (save for references to the 2024 Fund and the 2024 Employee Offering which will be varied such that they are read as references to the relevant Temporary Classic Fund and Subsequent Employee Offering, respectively).
29. Units are not transferable by holders of such Units except upon redemption and other than as reflected in the decision document.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:
1. with respect to the 2024 Employee Offering, the prospectus requirement will apply to the first trade in any Units or Shares acquired by Canadian Participants pursuant to this decision unless the following conditions are met:
a) the issuer of the security:
i) was not a reporting issuer in any jurisdiction of Canada at the distribution date, or
ii) is not a reporting issuer in any jurisdiction of Canada at the date of the trade;
b) the issuer of the security was a foreign issuer on the distribution date, as such term is defined in section 2.15(1) of NI 45-102, section 2.8(1) of OSC Rule 72-503 and section 11(1) of ASC Rule 72-501; and
c) the first trade is made:
i) through an exchange, or a market, outside of Canada, or
ii) to a person outside of Canada; and
2. for any Subsequent Employee Offering under this decision completed within five years from the date of this decision:
a) the representations other than those in paragraphs 5, 13(i) and 27 remain true and correct in respect of that Subsequent Employee Offering, and
b) the conditions set out in paragraph 1 above apply to any such Subsequent Employee Offering (varied such that any references therein to the 2024 Employee Offering are read as references to the relevant Subsequent Employee Offering); and
3. in the Provinces of Ontario and Alberta, the prospectus exemption above, for the first trade in any Units or Shares acquired by Canadian Participants pursuant to this decision, is not available with respect to any transaction or series of transactions that is part of a plan or scheme to avoid the prospectus requirements in connection with a trade to a person or company in Canada.
"Michael Balter"
Manager, Corporate Finance Division
Ontario Securities Commission
OSC File #: 2024/0155