Total S.A.
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the prospectus and dealer registration requirement in respect of certain trades of securities in connection with employee share offerings by a French issuer -- The offerings will involve the use of collective employee shareholding vehicles, each a fonds communs de placement d'entreprise (FCPE) -- The filer cannot rely on the employee prospectus exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions or the plan administrator exemption in section 8.16 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations as the shares are not being offered to Canadian employees directly by the issuer, but through the FCPEs -- Canadian employees will receive disclosure documents -- The FCPEs are subject to the supervision of the French Autorité des marchés financiers -- The employee share offering plan involving a swap element is limited to leverage of four times the initial investment of the employee -- Relief granted, subject to conditions and a 5 year sunset clause.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 74(1).
Citation: Re Total S.A., 2017 ABASC 37
March 6, 2017
IN THE MATTER OF THE SECURITIES LEGISLATION OF ALBERTA AND ONTARIO (the Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF TOTAL S.A. (the Filer)
DECISION
Background
The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for:
1. an exemption from the prospectus requirement (Prospectus Relief) with respect to each distribution of:
(a) a unit of FCPE Total Actionnariat International Relais 2017 (the Intermediary Fund) pursuant to the global employee share offering of the Filer for 2017 (the Current Employee Offering) to or with an employee of a Canadian related entity of the Filer (a Canadian Related Entity), including, Atotech Canada Ltd., Hutchinson Aéronautique et Industrie Limitée, Total Canada Inc., Total E&P Canada Limited and Total Trading and Marketing Canada, who is on the payroll of a Canadian Related Entity at the end of the subscription period for the Current Employee Offering and who has been employed thereby at the closing of the subscription period and for at least a specified minimum period prior thereto (a Qualified Canadian Participant);
(b) a unit of TAIC COMPARTIMENT A subfund of the Total Actionnariat International Capitalisation fund (the Classic Fund, and together with the Intermediary Fund, the Classic Funds) to or with a Qualified Canadian Participant;
(c) a unit of Total Intl B Capital + 2017 subfund of the Total Intl Capital fund (the +Fund) to or with a Qualified Canadian Participant;
(d) a unit of the Classic Fund that is created as a result of the merger of the Intermediary Fund with the Classic Fund whereby Qualified Canadian Participants' units in an Intermediary Fund are exchanged for units of the Classic Fund;
(e) a unit of either of the Classic Funds that a Qualified Canadian Participant receives by virtue of any dividend paid on the common shares of the Filer (the Shares) held in either of the Classic Funds for Qualified Canadian Participants that results in the subsequent issuance of additional units of either of the Classic Funds to a Qualified Canadian Participant;
(f) a unit of either of the Classic Funds by a Qualified Canadian Participant to either of the Classic Funds, or a Share by either of the Classic Funds to a Qualified Canadian Participants, upon the redemption of units by a Qualified Canadian Participant;
(g) a unit of the +Fund by a Qualified Canadian Participant to the +Fund, or a Share by the +Fund to a Qualified Canadian Participant, upon the redemption of units of the +Fund by a Qualified Canadian Participant;
(h) a unit of the Classic Fund that a Qualified Canadian Participant receives by virtue of any merger of the +Fund with the Classic Fund; and
(i) a unit distributed in connection with a Subsequent Employee Offering (as described below and, together with the Current Employee Offering, an Employee Offering);
2. an exemption from the dealer registration requirement (Registration Relief, and together with the Prospectus Relief, the Exemptive Relief Sought) in respect of each of the Filer, the Canadian Related Entities, the Classic Funds, the +Fund and the respective manager from time to time of each of the Classic Funds and the +Fund (the Manager), with respect to each trade of:
(a) a unit of the Intermediary Fund for the Current Employee Offering to or with a Qualified Canadian Participant;
(b) a unit of either of the Classic Funds to or with a Qualified Canadian Participant;
(c) a unit of the +Fund to or with a Qualified Canadian Participant;
(d) a unit of the Classic Fund that is created as a result of the merger of any Intermediary Fund with the Classic Fund whereby Qualified Canadian Participants units in an Intermediary Fund are exchanged for units of the Classic Fund;
(e) a unit of either of the Classic Funds that a Qualified Canadian Participant receives by virtue of any dividend paid on the Shares held in the Classic Funds for Qualified Canadian Participants that results in the subsequent issuance of additional units of either of the Classic Funds to a Qualified Canadian Participant;
(f) a unit of the Classic Fund that a Qualified Canadian Participant receives by virtue of any redemption of units of the +Fund for units of the Classic Fund;
(g) a unit of the Classic Fund that a Qualified Canadian Participant receives by virtue of any merger of the +Fund with the Classic Fund; and
(h) a unit distributed in connection with a Subsequent Employee Offering.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission is the principal regulator for this application;
(b) the Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Québec; and
(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.
Interpretation
Terms defined in National Instrument 14-101 Definitions or in MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
In this decision, related entity has the same meaning given to such term in section 2.22 of National Instrument 45-106 Prospectus Exemptions.
Representations
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation formed under the laws of France.
2. The Shares are listed on the Euronext Paris Eurolist and on the New York Stock Exchange (in the form of American Depositary Shares).
3. The Filer is not and has no current intention of becoming a reporting issuer under the securities legislation in any of the jurisdictions of Canada.
4. Each of the Canadian Related Entities 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 securities legislation in any of the jurisdictions of Canada.
5. Neither the Filer nor any of its Canadian Related Entities is in default of securities legislation in any of the jurisdictions of Canada.
6. Qualified Canadian Participants will be invited to participate in an Employee Offering under the terms of two subscription options: the "classic plan" (the Classic Plan) and the "capital + plan" (the Capital + Plan), both intended to provide Qualified Canadian Participants with an opportunity to indirectly hold an investment in the Shares.
7. Each subsequent offering (Subsequent Employee Offering) to employees of a Canadian Related Entity or an entity that is directly or indirectly controlled by the Filer will be similar to the Current Employee Offering, with each of the representations in paragraphs 3 through 5, 8, 9, 11 through 20, and 24 through 35 hereof being applicable (save for the identities of particular special-purpose entities).
8. The Employee Offerings will be made only to employees of the Filer, of the Canadian Related Entities or of other entities directly or indirectly controlled by the Filer.
9. Only participants in an Employee Offering are allowed to hold units of the Classic Funds and the +Fund.
10. For the Current Employee Offering, there are approximately 393 Qualified Canadian Participants resident in Canada (approximately 265 in Québec, 39 in Ontario and 89 in Alberta) who represent in aggregate less than 0.40% of the Filer's employees worldwide.
11. Qualified 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 cumulative amount invested by a Qualified Canadian Participant in an Employee Offering under both plans cannot exceed a specified percentage (currently 25%) of his or her estimated gross annual remuneration or allocations for the calendar year in which an Employee Offering occurs.
12. Qualified Canadian Participants can complete a subscription form during a prescribed subscription period indicating the amount they wish to invest in the Employee Offering. The subscription price will be communicated to the Qualified Canadian Participants and will be determined by the commencement of the subscription period. The subscription price will be determined as provided for in paragraph 19(b) and paragraph 20(a) below for the Classic Funds and the +Fund, respectively.
13. The Classic Funds and the +Fund are and will be collective shareholding vehicles of a type commonly used in France for investing in shares of an issuer by employee-investors.
14. The Classic Funds and +Fund must be registered and approved by the French Autorité des marchés financiers (AMF France) at the time of their creation.
15. The Classic Funds and the +Fund are not and have no current intention of becoming reporting issuers under the securities legislation in any of the jurisdictions in Canada.
16. After each Employee Offering, the relevant Intermediary Fund and the Classic Fund will invest in Shares. From time to time, cash in respect of dividends paid on the Shares held in the Classic Funds will be reinvested in Shares. Classic Funds may also hold cash or cash equivalents pending investments in the Shares and for the purpose of unit redemptions.
17. After each Employee Offering, the +Fund will invest in Shares and may also hold cash or cash equivalents pending investments in the Shares and for the purpose of unit redemptions.
18. The payment of dividends on the Shares (in the ordinary course or otherwise) is strictly determined by the board of directors of the Filer and approved by the shareholders of the Filer. The Filer has not made any commitment to the Bank (as defined below) as to any minimum payment of dividends during the term of the Lock-Up Period (as defined below).
19. Under the Classic Plan, an Employee Offering will involve an offering of Shares to be subscribed through the Classic Funds as follows:
(a) Qualified Canadian Participants will subscribe for and be issued units of the relevant Intermediary Fund which will, in turn, subscribe for and hold Shares on behalf of the Qualified Canadian Participants;
(b) the subscription price for Shares is equal to the price calculated as the average of the closing prices of the Shares for a specified number of trading days ending on a date preceding the date of the corporate decision on which the dates of the subscription period are set and the Employee Offering commences (the Reference Price), less a specified discount to the Reference Price;
(c) after completion of an Employee Offering, the Intermediary Fund will be merged with the Classic Fund, and the units of the Intermediary Fund held by Qualified Canadian Participants will be exchanged for units of the Classic Fund and the Shares previously held by the Intermediary Fund will be held in the Classic Fund;
(d) the units of the Classic Funds will be subject to a hold period of approximately five years from the issuance date (the Lock-Up Period), subject to certain exceptions prescribed by French law (such as a release on death, disability or termination of employment);
(e) any dividends paid on the Shares held in the Classic Funds on behalf of a Qualified Canadian Participant, and any income and earnings on the assets in the Classic Funds, will be used by the Classic Funds to purchase more Shares, and additional units will be issued to the Qualified Canadian Participant to reflect such additional Shares being held in the Classic Funds;
(f) at the end of the Lock-Up Period, or any time thereafter, or in the event of an early release outlined under paragraph 19(d), a Qualified Canadian Participant may:
(i) redeem his or her units in the Classic Funds for the Qualified Canadian Participant's pro rata portion of the underlying Shares held in the Classic Funds or a cash payment equal to the net asset value of the units held by the Qualified Canadian Participant in the Classic Funds; or
(ii) continue to hold his or her units in the Classic Funds and redeem those units at a later date;
(g) units of Classic Funds held by Qualified Canadian Participants are not transferable, except when the units held by the Qualified Canadian Participants are exchanged when the Intermediary Fund merges with the Classic Fund; and
(h) units of Classic Funds will not be listed on any exchange.
20. Under the Capital + Plan, an Employee Offering will involve an offering of Shares to be subscribed through the +Fund as follows:
(a) Qualified Canadian Participants will subscribe for and be issued units of the +Fund, which will, in turn, subscribe for Shares on behalf of the Qualified Canadian Participants, at a subscription price that is equal to the Reference Price less a specified discount to the Reference Price;
(b) the +Fund will enter into a swap transaction (a Swap Transaction) with a bank (the Bank, which at present is Credit Agricole Corporate and Investment Bank), under which it will receive from the Bank an amount equal to a specified multiple of the initial investment of each Qualified Canadian Participant (the Multiple), and under which:
(i) the +Fund, using money received by the +Fund from the Qualified Canadian Participants and from the Bank pursuant to the Swap Transaction, subscribes for a number of Shares corresponding to the total of:
A. the Shares subscribed with the subscription amount received from each Qualified Canadian Participant; plus
B. additional Shares equal to the Multiple;
(ii) the Filer issues to the +Fund a number of Shares corresponding to:
A. the subscription amount received from its Qualified Canadian Participants; plus
B. the additional Shares corresponding to the Multiple;
(iii) the +Fund will:
A. pay to the Bank an amount equivalent to the sum of all dividends that it receives on Shares on each payment date thereof; and
B. at the end of the Lock-Up Period, or earlier in the case of early release (as outlined in paragraph 20(c)), transfer to the Bank all Shares held by the +Fund (in the case of early release, the +Fund will transfer to the Bank only the Shares that correspond to the redeemed units); and
(iv) the Bank will pay to the +Fund at the end of the Lock-Up Period, or earlier in the case of early release, an amount equal to:
A. 100% of the initial subscription by a Qualified Canadian Participant; plus
B. the amount which is the greater of:
(1) a multiplier of the Protected Average Increase (as described below) of a Share over the Reference Price (the Stake in the Protected Average Increase); and
(2) a specified annual capitalized return on the Qualified Canadian Participant's initial investment (the Annual Compound Return);
(c) the subscribed Shares will be held in the +Fund until the end of the Lock-Up Period, or earlier, in the case of early release, and the Qualified Canadian Participant will receive units in the +Fund;
(d) any dividends paid on Shares and any income and earnings on other assets held in the +Fund will not increase the value of +Fund units; rather, those amounts will be transferred to the Bank under the Swap Transaction as described above;
(e) the Lock-Up Period will apply to +Fund units, subject to certain early release exceptions prescribed by French law (such as a release on death, disability or termination of employment);
(f) at the end of the Lock-Up Period (or earlier, in the case of a permitted early release) Qualified Canadian Participants will be entitled to receive from the +Fund 100% of their initial contribution, plus the greater of:
(i) the Stake in the Protected Average Increase; and
(ii) the Annual Compound Return (pro-rated in the event of an early release);
(g) the "Protected Average Increase" will be calculated on the basis of the average of values of the Share recorded a set number of times per month between the date of the subscription by the +Fund for Shares and the end of the Lock-Up Period, each value being the greater of the Reference Price and the price of the Share on such record date;
(h) before the end of the Lock-Up Period, Qualified Canadian Participants will choose between:
(i) redemption of their units in cash or in Shares; and
(ii) redemption of their units of the +Fund in exchange for units of the Classic Fund;
(i) accordingly, at the end of the Lock-Up Period, a Qualified Canadian Participant may:
(i) redeem his or her units in the +Fund for cash (or Shares having an equal value) equal to his or her initial contribution plus the greater of: (x) the Stake in the Protected Average Increase; and (y) the Annual Compound Return; or
(ii) continue holding units of the Classic Fund received in exchange for his or her units of the +Fund;
(j) any Qualified Canadian Participant who does not select between (i) redemption of his or her Units in cash or Shares, or (ii) transfer of his or her Units to the Classic Fund, as described above, will be deemed to have elected (ii);
(k) at the end of the Lock-Up Period, the +Fund may be merged into the Classic Fund;
(l) units of the +Fund held by Qualified Canadian Participants are not transferable, except as described above; and
(m) +Fund units will not be listed on any exchange.
21. The initial value of a unit of an Intermediary Fund will be approximately equal to the subscription price of a Share as described above in paragraph 19(b).
22. The value of a unit of the Classic Fund is tied to the market price of Shares, plus or minus 1%. The value of a unit any of the Classic Funds will be based on the relevant fund's net assets divided by the number of its units outstanding.
23. The initial value of a unit of the +Fund is calculated based on the value of underlying assets of the +Fund.
24. Subject to the Lock-Up Period hold requirement described above, the Classic Funds and the +Fund will redeem units at the request of a Qualified Canadian Participant, making payment in cash or the equivalent number of Shares. The amount payable on redemption of a unit of the Classic Funds will be based of the per-unit net asset value of such fund. The amount payable on redemption of a +Fund unit will be as set out in paragraph 20(f).
25. It is anticipated that any resale by a Qualified Canadian Participant of Shares received on the redemption of units of the Classic Funds or of the +Fund will be effected through the facilities of, and in accordance with the rules of, a foreign exchange.
26. Shares issued under an Employee Offering will be deposited in the relevant Intermediary Fund or in the +Fund through a depository (the Depositary). The Depositary will carry out orders to purchase and sell securities, and take all necessary action to allow the Classic Funds and +Fund to exercise the rights relating to the Shares held. The Depositary must carry out its activities in accordance with French law. The current Depository is CACEIS Bank France, a large French commercial bank.
27. The Classic Funds and the +Fund are or will be established by their respective Manager and the Filer. The Manager will be a portfolio management company governed by the laws of France. The Manager will be registered with AMF France to manage French investment funds and will comply with the rules of AMF France. At present, the Manager of each of the Classic Funds and +Fund is Amundi Asset Management, a limited liability company registered in the Paris Trade and Companies Register. It is not and has no current intention of becoming a reporting issuer under the securities legislation in any of the jurisdictions of Canada, nor is it registered as an adviser or a dealer under the securities legislation in any of the jurisdictions of Canada. To the best of the Filer's knowledge, the Manager is not in default of securities legislation in any of the jurisdictions of Canada.
28. The Manager's portfolio management activities in connection with Employee Offerings will be limited to purchasing Shares from the Filer and selling such Shares (in the case of the Classic Funds, in a marketplace (as defined in National Instrument 21-101 Marketplace Operation (a Marketplace)); and in the case of the +Fund, to the Bank) as necessary in order to fund redemption requests. The Filer, the Manager, the Canadian Related Entities or any of their employees, agents or representatives will not be involved in providing advice to any Qualified Canadian Participant with respect to investments in the Shares, units of the Classic Funds or units of the +Fund. Manager's activities will in no way affect the underlying value of the Shares or of units of the Classic Funds or the +Fund.
29. The management of each of the Classic Funds and the +Fund will be overseen by a separate supervisory board (the Supervisory Board) comprised of employee unitholders from the various geographical zones in which the Filer operates and management representatives of the Filer. The Supervisory Board's duties will include, among other things, examining the Classic Funds' and the +Fund's management reports and annual accounts, reviewing major changes in the Classic Funds and +Fund and making decisions about the merger of an Intermediary Fund with the Classic Fund.
30. Administrative, accounting, audit and financial management expenses incurred by the Classic Funds and the +Fund will be paid by the Filer. Other expenses incurred by the Classic Funds and the +Fund, including transaction fees relating to the purchase or sale of Shares, will be borne by the respective fund and paid from its assets.
31. Qualified Canadian Participants will receive an information package in French or English, as they choose, which will include a summary of the terms of the applicable Employee Offering and a description of relevant Canadian income tax consequences.
32. Qualified Canadian Participants will have access, through the Filer's website, to the Filer's annual report filed with the United States Securities and Exchange Commission and to the continuous disclosure furnished by the Filer to its shareholders generally.
33. A copy of the rules of the Classic Fund or of +Fund will be made available to Qualified Canadian Participants when they receive their application to subscribe for units of an Intermediary Fund or of the +Fund, respectively.
34. Each Qualified Canadian Participant will receive, at least annually, a statement of account.
35. As of the date hereof and after giving effect to the Employee Offering, Qualified 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
Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.
The decision of the Decision Makers under the Legislation is that the Exemptive Relief Sought is granted:
(a) for the Current Employee Offering provided that:
(i) the first trade of any security acquired by a Qualified Canadian Participant pursuant to this decision, in a Jurisdiction, is deemed to be a distribution or a primary distribution to the public under the Legislation of such Jurisdiction unless the following conditions are met:
A. the issuer of the security:
(1) was not a reporting issuer in any jurisdiction of Canada at any time during the distribution; and
(2) is not a reporting issuer in any jurisdiction of Canada at the date of such first trade;
B. at the date of any distribution under the Current Employee Offering, residents of Canada:
(1) do not own directly or indirectly more than 10% of outstanding Shares; and
(2) did not represent in number more than 10% of the total number of direct or indirect owners of outstanding Shares; and
C. the trade is made:
(1) through a Marketplace outside Canada; and
(2) to a person or company outside Canada; and
D. in Québec, the required fees are paid in accordance with subsection 271.6(1.1) of the Securities Regulation (Québec); and
(b) for any Subsequent Employee Offerings under this decision completed within five years from the date of this decision provided that the representations in paragraphs 3 through 5, 8, 9, 11 through 20, and 24 through 35 (varied to reflect the identities of particular special-purpose entities) remain true and correct in respect of that Subsequent Employee Offering, and the conditions set out in paragraph (a) above (varied such that any reference therein to the Current Employee Offering is read as a reference to the relevant Subsequent Employee Offering) are satisfied, as of the date of any distribution of a security under such Subsequent Employee Offering.
For the Commission:
"Tom Cotter"Vice-Chair"Stephen Murison"Vice-Chair