The Securities Commission has granted an exemption from the prospectus and registration requirements for trades related to an employee share offering by a French issuer, Schneider Electric S.E. The exemption was necessary because the offering to Canadian employees was made through special purpose entities (FCPEs), which are collective shareholding vehicles, rather than directly by the issuer. These entities are supervised by the French Autorite des marches financiers (French AMF).
The key conditions for the exemption include:
1. The offering is limited to qualifying employees, with investments capped at 25% of their gross annual compensation.
2. The shares are not listed on any Canadian exchange, and there is no expectation of a market developing in Canada.
3. Participation is voluntary and not tied to employment conditions.
4. Trades of shares by the Classic Fund to Canadian participants upon redemption of units are included in the exemption.
5. The number of Canadian participants and their ownership are minimal, representing less than 2% of qualifying employees globally.
6. Canadian participants will receive appropriate disclosure documents in French or English, including information on the offering and Canadian tax implications.
The exemption is subject to certain conditions, such as the issuer remaining a foreign issuer and not becoming a reporting issuer in Canada, and that first trades of the securities acquired must occur outside of Canada or to a person or company outside of Canada. The exemption is valid for the 2022 offering and any subsequent offerings within the next five years, provided the conditions are met and the representations remain true.
The decision is based on the securities legislation of Ontario and relies on Multilateral Instrument 11-102 Passport System for application in multiple jurisdictions, including British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, and Newfoundland and Labrador. The decision also references National Instrument 45-106 Prospectus Exemptions, National Instrument 45-102 Resale of Securities, Ontario Securities Commission Rule 72-503, and Alberta Securities Commission Rule 72-501.