The Securities Commission granted an exemption from the prospectus and registration requirements for trades made in connection with an employee share offering by a French issuer, Sanofi. The exemption was necessary because the offering was made through special purpose entities (FCPEs) rather than directly by the issuer, which is not the standard scenario covered by the employee exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions.
Key facts include:
– The offering is for Sanofi employees in Canada (Canadian Employees), who are offered shares through FCPEs, a French collective shareholding vehicle.
– The FCPEs are registered with the French Autorite des marches financiers (French AMF) and are not intended to become reporting issuers in Canada.
– Trades involve units of the FCPEs and shares of Sanofi upon redemption of units by Canadian Participants.
– The offering includes a lock-up period of approximately five years, with certain exceptions.
– There is no market for Sanofi’s securities in Canada, and the number of Canadian participants is minimal.
– Canadian participants will receive disclosure documents and are not induced to participate by employment expectations.
The outcome is that the Securities Commission granted the requested relief, subject to conditions that include:
– Sanofi must be a foreign issuer at the distribution date.
– First trades of units or shares must be through an exchange or market outside Canada or to a person or company outside Canada.
– The representations made must remain true for any subsequent offering within five years from the decision date.
The relevant laws or regulations include:
– Securities Act, R.S.O. 1990, c. S.5, as amended, 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.
The decision was made considering that the exemption meets the test set out in the Legislation for the principal regulator to make the decision. The conditions for the exemption are designed to ensure that the offering does not circumvent Canadian securities laws and that Canadian participants are adequately informed and protected.