Tyco International Ltd. - MRRS Decision
Headnote
MRRS for Exemptive Relief Applications first trades by Canadian Participants effected through an agent and dealerin shares of a reporting issuer obtained pursuant to share purchase plans exempted from section 25 of the Act, providedthat at the time of such trade reporting issuer has a de minimus (5%) market in any one of the Jurisdictions and firsttrades executed through stock exchange outside Ontario, Nasdaq Stock Market or London Stock Exchange AutomatedQuotation System.
Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am., s. 25, s.74(1).
Securities Exchange Act of 1934.
Rules Cited
OSC Rule 45-503 Trades to Employees, Executives and Consultants, ss. 2.4 and 3.5.
BC Instrument 45-507, Trades to Employees, Executives and Consultants, ss. 2.2 and 3.4.
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO, BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN,
MANITOBA, QUÉBEC, NEW BRUNSWICK,
NOVA SCOTIA, NEWFOUNDLAND AND THE NORTHWEST TERRITORIES
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
TYCO INTERNATIONAL LTD.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Ontario, BritishColumbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland, and the NorthwestTerritories (collectively, the "Jurisdictions") has received an application from Tyco International Ltd. (the "Filer") for adecision, pursuant to the securities legislation (the "Legislation") of the Jurisdiction, that the requirement of theLegislation that prohibits a person or company from trading in a security unless the person or company is registered inthe appropriate category of registration under the Legislation (the "Registration Requirement") shall not apply to firsttrades in common shares of the Filer (the "Shares") acquired by Canadian Participants (as defined below) pursuant toan employee stock purchase plan (the "Plan") of the Filer, made on behalf of the Canadian Participant by ComputershareInvestor Services Inc. (the "Agent") and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Dealer"), through thefacilities of a stock exchange outside of Canada.
AND WHEREAS, pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the"MRRS"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Filer is a company formed under the laws of Bermuda. The Filer is a reporting issuer under the Legislationin all of the Jurisdictions except New Brunswick, Newfoundland, and the Northwest Territories. The Filer'sreporting issuer status resulted from its merger with ADT Limited in 1997.
2. The Filer is a diversified manufacturing and service company that, through its subsidiaries: (i) designs,manufactures and distributes electrical and electronic components and multi-layer printed circuit boards; (ii)designs, engineers, manufactures, installs, operates and maintains undersea cable communications systems;(iii) designs, manufactures and distributes disposable medical supplies and other specialty products; (iv)designs, manufactures, installs and services fire detection and suppression systems and installs, monitors andmaintains electronic security systems; and (v) designs, manufactures and distributes flow control products andprovides environmental consulting services.
3. The authorized share capital of the Filer consists of 2,500,000,000 Shares. As at January 26, 2001,1,752,274,615 Shares were issued and outstanding.
4. The Shares are listed on the New York Stock Exchange (the "NYSE"), the London Stock Exchange and theBermuda Stock Exchange. The Shares are not listed for trading on any stock exchange in Canada. The Fileris not now and has no intention of applying to have the shares or any of its securities listed on any stockexchange in Canada.
5. The Shares are registered under the United States Securities Exchange Act of 1934, as amended (the "1934Act"). The Filer is not in default of the requirements of the 1934 Act and is not exempt from the reportingrequirements of the 1934 Act pursuant to Rule 12g 3-2 made thereunder.
6. Subject to certain exceptions, all employees and officers of the Filer and its affiliates (the "Tyco Group") areinvited to participate in the Plan ("Eligible Employees"). As of March, 2001 there were approximately 4,947Eligible Employees resident in Canada, broken down by Jurisdiction as follows: Ontario (2,617), BritishColumbia (301), Alberta (842), Saskatchewan (59), Manitoba (118), Québec (882), New Brunswick (19), NovaScotia (81), Newfoundland (22), and the Northwest Territories (6). Eligible Employees resident in theJurisdictions represent in the aggregate approximately 2.5% of the number of Eligible Employees worldwide.
7. The Plan was established to encourage stock ownership in the Filer by Eligible Employees so that they mightshare in the growth of the Filer by acquiring or increasing their proprietary interest in the Filer.
8. Participation in the Plan is voluntary and Eligible Employees will not be induced to participate in the Plan byexpectation of employment or continued employment.
9. Under the Plan, Eligible Employees resident in the Jurisdictions who elect to participate in the Plan (the"Canadian Participants") will authorize their employer to make payroll deductions for the purchase of Shareson the NYSE, up to a maximum of 100% of the employee's base monthly salary or commission.
10. The Canadian Participant's employer will make a matching contribution to the Plan each month equal to 15%of the Canadian Participant's payroll deduction. On a monthly basis, the employer will remit the total of theCanadian Participant and employer contributions to the Agent. The funds (including any dividends paid toCanadian Participants in respect of Shares purchased under the Plan) will be used by the Dealer to purchaseShares on the NYSE.
11. The Shares purchased on behalf of the Canadian Participants pursuant to the Plan will be held for theCanadian Participants by the Agent. The Canadian Participant's employer will pay all account maintenance andbrokerage fees for the purchase of Shares on behalf of its employees pursuant to the Plan. The CanadianParticipants will pay brokerage fees for the sale of any Shares obtained by the Canadian Participant throughthe Plan.
12. The Dealer is licensed with the U.S. Securities and Exchange Commission (the "SEC") and both the Dealerand Agent are licensed with the National Association of Securities Dealers, Inc. The Plan is subject toregulatory oversight by the SEC and all Canadian Participants will receive or have received copies of the Planand all disclosure materials relating to the Filer furnished to Plan participants resident in the United States,including a prospectus which complies with the applicable rules of the SEC.
13. All sales of Shares under the Plan on behalf of Canadian Participants will be made through the Agent and theDealer, through the facilities of and in accordance with the rules of the NYSE.
14. As of March 2001, registered holders of Shares resident in the Jurisdictions held less than 0.5 percent of theissued and outstanding Shares worldwide and represented less than 5 percent of the total number of registeredholders of Shares worldwide.
15. In view of the size of the outstanding share capital of the Filer, it is anticipated that, with the continued operationof the Plan, holders of Shares in the Jurisdictions will, in the aggregate, continue to hold less than 5 percentof the outstanding Shares worldwide, and that the number of holders of Shares in the Jurisdictions will be lessthan 5 percent of the total number of holders worldwide.
16. Since there is no market for the Shares in the Jurisdictions, and none is expected to develop, it is anticipatedthat any sale of Shares acquired by a Canadian Participant pursuant to the Plan will be effected through thefacilities of and in accordance with the rules of the NYSE or such other stock exchange or market outsideCanada on which the Shares may be listed or quoted for trading.
17. Absent this Decision, Canadian Participants will be unable to rely upon exemptions for employees fromregistration requirements in the Legislation in Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, NovaScotia, Newfoundland and the Northwest Territories if Shares acquired by the Canadian Participant under thePlan are sold on a stock exchange outside of Canada otherwise than through an appropriately registereddealer.
18. Since the Filer is a reporting issuer in Ontario and British Columbia, absent this Decision, the CanadianParticipants will be unable to rely on exemptions for employees from the Registration Requirements in theLegislation of Ontario and British Columbia to effect future trades in Shares if Shares acquired by the CanadianParticipant under the Plan are sold on a stock exchange outside of Canada otherwise than through anappropriately registered dealer.
AND WHEREAS pursuant to the MRRS this Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers under the Legislation is that the Registration Requirement in theLegislation shall not apply to first trades by a Canadian Participant in any Shares acquired by the Canadian Participantunder the Plan, made on behalf of the Canadian Participant by the Agent and Dealer, provided that:
(a) at the time of acquisition of the Shares by the Canadian Participant
(i) persons or companies whose last address as shown on the books of the Filer as in any one of theJurisdictions and who held Shares
A. did not hold more than 5 percent of the outstanding Shares; and
B. did not represent in number more than 5 percent of the total number of holders of Shares;or
(ii) persons or companies who were in any one of the Jurisdictions and who beneficially owned Shares
A. did not beneficially own more than 5 percent of the outstanding Shares; and
B. did not represent in number more than 5 percent of the total number of holders of Shares;and
(b) the first trade is executed
(i) through the facilities of a stock exchange outside Canada;
(ii) on the Nasdaq Stock Market; or
(iii) on the Stock Exchange Automated Quotation System of the London Stock Exchange Limited.
May 23, 2001.
"J.A. Geller" "R. Stephen Paddon"