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 issuerto employees of an issuer and its affiliates, the subsequent transfer of the shares to aFrench investment fund as part of an employee stock ownership program and thedistribution of units of the fund to employees and former employees of the issuer andits affiliates, subject to certain conditions - also relief from the registration requirementgranted 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 Rules

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

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

Instruments Cited

National Instrument 81-102 - Mutual Funds.

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND NEWFOUNDLAND

AND

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

AND

IN THE MATTER OF
RHODIA S.A.

MRRS DECISION DOCUMENT


WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of Ontario and Newfoundland (the "Jurisdictions") has received anapplication from Rhodia S.A. (the "Filer") for a decision under the securities legislation ofthe 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 certain trades inordinary shares of the Filer (the "Shares") and in units ("the "Units") of the RhodiaInternational Fund (the "Fund") made in connection with the Filer's global employeeoffering (the "Employee Share Offering") to, or on behalf of, Qualifying Employees(defined in paragraph 7 below) who are residents in the Jurisdictions (the"Canadian Participants"), subject to certain conditions; and

B. the manager of the Fund, Interépargne (the "Manager"), be exempt from therequirement contained in the Legislation to be registered as an advisor (the"Advisor Registration Requirement").

AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS the Filer has represented to the Decision Makers as follows:

1. The Filer is a corporation formed under the laws of the French Republic. Theordinary shares of the Filer are listed on the Paris Bourse and on the New YorkStock Exchange (in the form of American Depositary Shares).

2. Each of the Canadian affiliates of the Filer, Rhodia Canada Inc., RhodiaEngineering Plastics Inc., Albright & Wilson Americas Ltd. and Albright & WilsonLtd. (the "Canadian Affiliates" and, together with the Filer and other affiliates of theFiler, the "Rhodia Group"), is a direct or indirect controlled subsidiary of the Filer.

3. There are approximately 334 Canadian Participants, of which approximately 214are resident in Ontario, 119 are resident in Quebec, and one is resident inNewfoundland. The number of Canadian Participants represent in the aggregateless than 1% of the Qualifying Employees worldwide.

4. The Fund will be a French investment fund (fonds commun de placementd'entreprise or "FCPE") established pursuant to the laws of the French Republicand headquartered in France for the purpose of implementing the Employee ShareOffering.

5. The Manager is an asset management company governed by the laws of theFrench Republic. The Manager is registered with the French Commission desOpérations de Bourse (the "COB") to manage FCPEs and complies with the rulesof the COB.

6. The Filer, the Canadian Affiliates, the Fund and the Manager are not reportingissuers under the Legislation and none has a present intention of becoming areporting issuer under the Legislation.

7. The Fund will be established by the Manager solely to facilitate the participation ofcurrent employees of the Rhodia Group (collectively, the "Qualifying Employees")in the Employee Share Offering and to simplify custodial arrangements for suchparticipation.

8. The Filer proposes to issue up to 5,000,000 Shares solely for purchase byQualifying Employees. Qualifying Employees will subscribe for Shares from theFiler at a purchase price (the "Reference Price") equal to the average of the closingprices of the Shares on the 20 days preceding approval of the Employee ShareOffering by the Filer's board of directors, less a 15% discount and a 5% employercontribution, and will transfer those Shares to the Fund in exchange for anequivalent number of Units. Dividends paid on the Shares held in the Fund will becapitalized and investors will be credited with additional Units.

9. The Fund plans to hold only Shares and cash in respect of dividends paid on theShares, and proposes to issue its Units to Qualifying Employees, including theCanadian Participants, in an amount proportionate to their respective investmentsin Shares. Except as described below, the Fund will not engage in any of theinvestment practices described in sections 2.3 through 2.6 of National Instrument81-102 Mutual Funds.

10. Units of the Fund will not be transferable. All Units of the Fund acquired in theEmployee Share Offering will be subject to a five-year hold period, subject toexceptions prescribed by French law, including early redemption based onretirement, disability, death, or dismissal of the employee. At the end of the five-year hold period, a Canadian Participant may (i) redeem Units in consideration forthe underlying Shares or a cash payment equal to the then-market value of theShares held by the Fund, or (ii) continue to hold Units (or units of a successorFCPE to which the Fund's assets are transferred), and redeem the Units at a laterdate.

11. The Manager of the Fund is authorized to buy and sell Shares of the Filer and tohold cash in accordance with the Fund's rules, including in order to meetredemption requests. The Manager is also responsible for preparing accountingdocuments and publishing periodic informational documents as provided by therules of the Fund.

12. A redemption charge of 0.65% will be charged to a holder who redeems Units, suchcharge to accrue to the Fund and be deducted from any sale proceeds remitted tothe holder. All management charges relating to the Fund, including a base fee of0.10% of net assets per year (0.05% of net assets per year for assets between FRF500 million and FRF 1 billion), will be paid by the Filer.

13. Shares issued in the Employee Share Offering will be deposited in the Fundthrough Natexis Banques Populaires (the "Depositary"), a French bank subject toFrench banking legislation.

14. Under French law, the Depositary must be selected by the Manager from among alimited number of companies identified on a list by the French Minister of theEconomy, and its appointment must be approved by the COB. The Depositarycarries out orders to purchase, trade and sell securities in the portfolio and takesall necessary action to allow the Funds to exercise the rights relating to thesecurities held in their respective portfolios.

15. Participation in the Employee Share Offering will be voluntary and CanadianParticipants will not be induced to participate in the Employee Share Offering byexpectation of employment or continued employment.

16. None of the Filer, the Canadian Affiliates or any of their employees, agents orrepresentatives will provide investment advice to the Qualifying Employees withrespect to an investment in the Shares or the Units.

17. The total amount invested by a Qualifying Employee in the Employee ShareOffering cannot exceed 25% of such Qualifying Employee's gross annualcompensation.

18. Prior to any purchase of Shares from the Filer, Canadian Participants will receivean information package in the French or English language, as applicable,disclosing, among other things, a summary of the terms of the Employee ShareOffering, the objective of the Fund, the method of valuation of a Unit of the Fund,the fees payable by purchasers and the Fund, a notice relating to the FCPE and adescription of Canadian income tax consequences and risk factors of purchasingand holding the Shares and Units. Upon request, employees may receive copiesof the Filer's annual report on Form 20-F filed with the United States Securities andExchange Commission and/or the French Document de Référence filed with theCOB in respect of the Shares and a copy of the Fund's rules.

19. The Canadian Participants who subscribe for Shares and Units will also receivecopies of the continuous disclosure materials relating to the Filer furnished toshareholders of the Filer generally.

20. There will be no market for the Shares or Units in Canada.

AND WHEREAS under the System, this MRRS Decision Document evidences thedecision 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 under the Legislation is that:

(a) the Registration and Prospectus Requirements shall not apply to trades of Sharesby the Filer or by the Fund to a Canadian Participant in connection with theEmployee Share Offering, provided that the first trade in such Shares shall bedeemed to be a distribution under the Legislation, unless;

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

(ii) it is executed through facilities of a stock exchange outside of Canada;

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

(c) the Manager is exempt from the Advisor Registration Requirements as a result ofacting as the investment manager of the Funds, provided that the investmentactivities of the Funds and authority of the Manager are limited to the activitiesdescribed in paragraphs 9 and 11 respectively.

August 31st, 2000.

"Howard I. Wetson"      "R. Stephen Paddon"