The Securities Commission granted an exemption from the prospectus and registration requirements for trades related to an employee share offering by a French issuer, Talan Holding S.A.S. (the Filer), to Canadian employees. The Filer could not rely on the standard employee exemption as the shares were offered through special purpose entities (the Fund), not directly by the issuer.
Key facts include:
– The Filer is a French corporation with business operations in Canada through local entities.
– The Filer established a global employee share offering (the 2022 Employee Offering) and plans subsequent offerings for the next four years.
– The offerings are for employees of the Talan Group who meet certain criteria (Qualifying Employees).
– The Fund, a French collective shareholding vehicle (FCPE), was established to facilitate employee participation in the offerings.
– The Fund is managed by Equalis Capital France (the Management Company) and is registered with the French Autorité des marchés financiers.
– Participation is voluntary, and the investment by a Canadian employee is capped at 25% of their gross annual compensation.
– The shares and units are not listed on any Canadian stock exchange, and there is no market for them in Canada.
– The number of Canadian participants and their share ownership are considered de minimis.
The reasoning for the exemption includes:
– Canadian participants will receive adequate disclosure documents.
– The special purpose entities are under the supervision of the French regulator.
– Participation is not induced by the expectation of employment or continued employment.
– The Filer is a foreign issuer, and the shares and units are not intended to be listed in Canada.
The outcome is that the Exemption Sought is granted, subject to conditions that include:
– The prospectus requirement will apply to the first trade of units unless certain conditions are met, such as the issuer being a foreign issuer and the trade occurring outside of Canada or to a person outside of Canada.
– The representations made by the Filer remain true for any subsequent offerings within five years from the decision date.
– The exemption for the first trade is not available for transactions that are part of a scheme to avoid prospectus requirements in Canada.
The decision is underpinned by the Securities Act, R.S.O. 1990, c. S.5, as amended, and relevant regulations including National Instrument 45-106 Prospectus Exemptions and National Instrument 45-102 Resale of Securities.