Securities Law & Instruments


Headnote

Mutual Reliance Review System for Exemptive Relief Applications - relief from theregistration and prospectus requirements with respect to trades in shares by an issuerand controlling shareholder to employees and former employees of an issuer and itsaffiliates, the subsequent transfer of the shares to a French investment fund as part ofan employee stock ownership program and the distribution of units of the fund toemployees and former employees of the issuer and its affiliates, subject to certainconditions - also relief from the registration requirement granted to advisor of the fund.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53 and 74(1).

Applicable Ontario Regulations

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015 as am.

Applicable Ontario Rules

OSC Rule 45-503 - Trades to Employee, Executives and Consultants.

OSC Rule 72-501 - Prospectus Exemption for First Trade Over a Market OutsideOntario.

Policies Cited

National Policy Statement No. 39.


IN THE MATTER OF
THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, ONTARIO AND QUÉBEC

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
THOMSON MULTIMEDIA AND THOMSON S.A.

MRRS DECISION DOCUMENT


WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of the British Columbia, Alberta, Ontario and Québec (the "Jurisdictions")has received an application from Thomson multimedia (the "Issuer") and its controllingshareholder, Thomson S.A. (the "Controlling Shareholder"), for a decision pursuant to thesecurities legislation of the Jurisdictions (the "Legislation") that:

a. the requirements contained in the Legislation to be registered to trade in a securityand to file and obtain a receipt for a preliminary prospectus and a prospectus (the"Registration and Prospectus Requirements") shall not apply to the distribution bythe Issuer and the Controlling Shareholder of ordinary shares (common stock) ofthe Issuer (the "Shares") to current employees of the Issuer and its affiliates, andto certain former employees of the Issuer and its affiliates, who choose toparticipate in the Employee Share Offering (defined in paragraph 8 below) and areresident in Canada (collectively, the "Canadian Participants") or to the subsequenttransfer of such Shares to the Thomson multimedia Shareholding Mutual Fund (the"Fund");

b. the Registration and Prospectus Requirements shall not apply to the distribution ofthe securities (the "Units") of the Fund to the Canadian Participants; and

c. the manager of the Fund (the "Manager") is exempt from the requirement containedin the Legislation to be registered to act as an adviser (the "Adviser RegistrationRequirement");

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;

AND WHEREAS the Issuer and the Controlling Shareholder have represented tothe Decision Makers as follows:

1. The Issuer is a corporation formed under the laws of France. It is not, and has nointention of becoming, a reporting issuer under the Legislation.

2. The Controlling Shareholder is a corporation formed under the laws of France andis wholly-owned by the French state. It is not, and has no intention of becoming,a reporting issuer under the Legislation.

3. The Fund is an investment fund established pursuant to the laws of France for thepurpose of implementing the Employee Share Offering. It is not, and has nointention of becoming, a reporting issuer under the Legislation.

4. The Manager, Plan Gestion SNC, is a corporation formed under the laws of France.The Manager is registered with the French Commission de Opérations de Bourse(the "COB") to manage French investment funds and complies with the rules of theCOB. The Manager manages other accounts and investment vehicles that have anaggregate of E2.5 billion (approximately C$4.0 billion) in assets. The Manager isnot, and has no intention of becoming, a reporting issuer under the Legislation.

5. The Fund will be established for the sole purpose of providing current employeesof the Issuer and its affiliates, and former employees of the Issuer and its affiliateswho retired after having been employed by the Issuer and its affiliates for at leastfive years, (collectively, the "Qualifying Employees") with an opportunity to indirectlyacquire an interest in the Shares. Only Qualifying Employees will be allowed tohold Units of the Fund, in an amount proportionate to the number of Shares whichsuch Qualifying Employees deposit in the Fund.

6. The Fund's portfolio shall consist exclusively of Shares. The Fund will not engagein any of the investment practices described in section 2.05 of National PolicyStatement No. 39 ("NP 39"), or similar investment practices described in thesuccessor instrument to NP 39.

7. The Manager may, for the Fund's account, acquire, sell or exchange all securitiesin the portfolio and make all reinvestments as provided in the Fund's regulations.It may also hold cash assets in accordance with the Fund's regulations specificallyto meet redemption requests. The Manager is also responsible for preparingaccounting documents and publishing periodic informational documents asprovided by the regulations of the Fund.

8. In accordance with French law, the Issuer will offer the Shares to QualifyingEmployees at a price per share of E 21.50 (C$ 32.00) (the "Employee ShareOffering"). A Qualifying Employee may not purchase more than E 132,356(approximately C$ 197,000) Shares in the Employee Share Offering. The Sharesfor which Qualifying Employees subscribe will be issued to the ControllingShareholder by the Issuer for distribution to the Qualifying Employees.

9. There are approximately 59 Qualifying Employees resident in Canada in theprovinces of British Columbia (6), Alberta (1), Ontario (49) and Québec (3), all ofwhom together account for less than 1% of the Qualifying Employees. Three of theQualifying Employees resident in Canada are former employees of the Issuer or itsaffiliates.

10. The Canadian-resident Qualifying Employees will not be induced to subscribe forShares by expectation of employment or continued employment.

11. The Canadian-resident Qualifying Employees have the option of holding Sharesdirectly, or indirectly, by holding Units of the Fund.

12. Under the Employee Share Offering, Qualifying Employees may acquire a certainnumber of free Shares ("Bonus Shares") to be distributed by the ControllingShareholder based on the number of Shares purchased and the time the Sharesare held.

13. Two subscription options will be available to Qualifying Employees. Under Option1: (i) the purchase price of the Shares will be the same as the offering price (the"Public Offering Price") in the concurrent public offering that will be undertaken bythe Issuer and the Controlling Shareholder in France and the United States; (ii)payment for the Shares shall be made immediately; and (iii) the Shares will not besubject to contractual resale restrictions. Under Option 2: (i) the purchase priceof the Shares will be the same as the Public Offering Price, less a 20% discount;(ii) payment for the Shares may be made immediately or in three instalments overa two year period; and (iii) the Shares purchased cannot be resold for two years(the "Lock-Up Period").

14. The Shares acquired under Option 2 may not be sold during the Lock-Up Period.The Issuer expects that the Shares will be listed on the Paris Bourse and on theNew York Stock Exchange (as American Depository Shares). After the applicableLock-Up Period, if the Shares continue to be listed on a stock exchange, the Sharesmay be sold by a Canadian Participant through such exchange in compliance withthe requirements of this MRRS Decision Document.

15. Upon receipt of Shares, the Canadian Participants may cause their Shares to bedeposited in the Fund through the Compagnie Financiére de CIC et de L'UnionEuropéenne acting as custodian (the "Custodian"), a French commercial banksubject to French banking legislation. In consideration for the deposit of Shareswith the Custodian, the Canadian Participants will receive a number of Unitscorresponding to the number of Shares they cause to be deposited in the Fund.

16. The Custodian has been selected by the Manger in accordance with French lawfrom among a limited number of companies identified on a list by the FrenchMinister of the Economy. The Custodian, whose appointment must be approved bythe COB, will carry out orders to purchase, trade and sell securities in the portfolioand take all necessary action to allow the Fund to exercise the rights relating to theShares held in the portfolio.

17. Units of the Fund will not be transferable. Upon request after the applicable Lock-Up Period, the Fund will redeem Units and pay to the holder an amount calculatedon the basis of the net market value of the corresponding Shares. The Fund, dueto board lot sizes, will be able to liquidate positions in the Shares more readily andat a better price than an individual investor.

18. Any redemption charges will be charged to the holder and will accrue to the Fund.All management charges relating to the Fund will be paid by the Issuer.

19. None of the Issuer, the Controlling Shareholder or any of their employees, agentsor representatives will provide investment advice to the Qualifying Employees withrespect to an investment in the Shares or the Units.

20. The Canadian-resident Qualifying Employees will receive an information packagein the French and English languages which will include a letter from the presidentof the Issuer and a summary of the terms of the Employee Share Offering. Theinformation package will also contain a description of Canadian income taxconsequences of participation in the Employee Share Offering and a statement that,as a consequence of this MRRS Decision Document, certain protections, rights andremedies provided by the legislation, including statutory rights of rescission ordamages, will not be available in respect of the Shares and Units issued pursuantto this decision. Upon request, prospectuses in respect of the Shares filed with theCOB and the United States Securities and Exchange Commission (the "SEC"), aswell as a copy of the Fund's regulations, will be made available to the Canadian-resident Qualifying Employees.

21. The Canadian Participants will receive copies of the continuous disclosurematerials relating to the Issuer furnished to shareholders resident in the UnitedStates by virtue of the registration of the Shares with the SEC under the UnitedStates Securities Act of 1933.

22. In certain of the Jurisdictions, the Issuer and the Controlling Shareholder will notbe able to rely on exemptions from the Registration and Prospectus Requirementscontained in the Legislation that relate to the issuance of securities to employees(the "Employee Exemptions").

23. The Fund will not be able to rely on the Employee Exemptions in respect of tradesin Units because there is no employment relationship between the Fund and anyof the Qualifying Employees.

24. The Manager will not be able to rely on exemptions from the Adviser RegistrationRequirements contained in the Legislation because it does not fall under any of thespecified categories.

25. As of the date hereof and as a result of the Employee Share Offering, the CanadianParticipants do not and will not beneficially own more than 10 per cent of theShares and do not and will not represent in number more than 10 per cent of thetotal number of holders of the Shares.

AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

The Decision of the Decision Makers pursuant to the Legislation is that:

(a) the Registration and Prospectus Requirements shall not apply to the distribution ofShares by the Issuer and Controlling Shareholder to the Canadian Participants inconnection with the Employee Share Offering, provided that the first trade in suchshares shall be a distribution under the Legislation, unless:

(i) the trade of Shares by the Canadian Participants is to the Fund; or

(ii) the trade of Shares by the Canadian Participants is through the facilities ofa stock exchange outside Canada in accordance with all of the rules andlaws applicable to such stock exchange;

(b) the Registration and Prospectus Requirements shall not apply to the distribution ofUnits by the Fund to the Canadian Participants in connection with the EmployeeShare Offering; and

(c) the Manager is exempt from the Adviser Registration Requirements as a result ofacting as the investment manager of the Fund, provided that the authority of theManager and the investment activities of the Fund are limited to the activitiesdescribed in paragraphs 6 and 7 above.

January 19th, 2000.

"J. A. Geller"     "Robert W. Korthals"