Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- issuer organized as dual holding company -- issuer to establish equity compensation plan for eligible Canadian employees -- because of dual holding company structure, issuer unable to rely upon prospectus and registration exemptions in Multilateral Instrument 45-105 -- prospectus and registration exemptions granted to permit trades in connection with equity compensation plan, subject to conditions.

Applicable Ontario Statutory Provisions

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

Applicable Ontario Rules

Multilateral Instrument 45-105 Trades to Employees, Senior Officers, Directors and Consultants.

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

UNILEVER UNITED STATES, INC.

AND UNILEVER CANADA INC.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Alberta and Ontario (the "Jurisdictions") has received an application from Unilever United States, Inc. ("Unilever US") and Unilever Canada Inc. (collectively, the "Filer") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that, subject to certain terms and conditions:

(a) the requirements contained in the Legislation to file and obtain a receipt for a preliminary prospectus and a prospectus (the "Prospectus Requirements") and to be registered to trade in a security (the "Registration Requirements") shall not apply to the distributions by the Filer of Options (as defined below) and Performance Shares (as defined below) that are made pursuant to the Unilever North America 2002 Omnibus Equity Compensation Plan (the "Omnibus Plan") to eligible employees (the "Employees") of Unilever Canada Inc. and its affiliates (collectively, "Unilever Canada") resident in the Jurisdictions;

(b) the Registration Requirements shall not apply to any trades of (i) Shares (as defined below) by the Filer to Employees, former Employees and personal representatives of, or beneficiaries under, the estate of an Employee or former Employee (collectively, "Current and Former Employees") upon exercise of the Options, (ii) Stock Awards (as defined below) by the Filer to Employees, and (iii) Shares by the Filer to Current and Former Employees upon payment of the Performance Shares;

(c) the Registration Requirements shall not apply to any trade of NV Shares (as defined below) by a Current and Former Employee; and

(d) the Registration Requirements shall not apply to trades in Options, Stock Awards, Performance Shares and Shares by a person or company when acting as an administrator (the "Administrator") under the Omnibus Plan.

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

AND WHEREAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions;

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

1. Unilever NV is a corporation incorporated under the laws of the Netherlands. As at December 31, 2003, Unilever NV had issued and outstanding 571,578,300 Ordinary Shares. The Ordinary Shares of Unilever NV are listed on the stock exchanges in Amsterdam, London, New York, Belgium, France, Germany, Luxembourg and Switzerland.

2. Unilever PLC is a corporation incorporated under the laws of England in 1894. As at December 31, 2003, Unilever PLC had issued and outstanding 2,911,458,580 Ordinary Shares. The Ordinary Shares of Unilever PLC are listed on the London Stock Exchange, and as American Depositary Receipts on the New York Stock Exchange.

3. Neither Unilever NV nor Unilever PLC is a reporting issuer under the laws of any jurisdiction of Canada. Unilever NV and Unilever PLC are subject to the "continuous disclosure" requirements of the Securities Exchange Act of 1934 (the "34 Act") of the United States. In particular, Unilever NV and Unilever PLC are not exempt from the reporting requirement of the 34 Act pursuant to Rule 13g 3-2.

4. Unilever PLC and Unilever NV are the two parent holding corporations in the Unilever group of companies, and function collectively as the parent organization for the Unilever group of companies under a structure that has been in place for over 70 years.

5. With some exceptions, Unilever PLC holds the shares in group companies in countries which formed part of the British Empire before 1939 while Unilever NV holds shares in group companies in other countries.

6. Unilever US is incorporated under the laws of Delaware and is an approximately 75% owned subsidiary of Unilever NV with the remaining approximately 25% owned by Unilever PLC.

7. Unilever Canada Inc. was amalgamated under the Business Corporations Act (Ontario) and is a wholly-owned indirect subsidiary of Unilever PLC.

8. Although Unilever PLC and Unilever NV are separate corporations, various arrangements have been implemented so that Unilever PLC and Unilever NV operate as nearly as practicably as a single company. By virtue of cross-share ownership, Unilever PLC and Unilever NV can collectively nominate the directors of each corporation and the two corporations accordingly have common directors. In addition, through an equalization agreement between Unilever PLC and Unilever NV, if the current profits of either company are insufficient to meet that company's preference for ordinary dividends, the other company may be required to advance the amount of the shortfall. Further, since 1983, each of Unilever NV and Unilever PLC has undertaken on request to guarantee borrowing by the other and to join in the other's guarantees of its group companies borrowings.

9. As a result of the foregoing arrangements, the annual report and accounts for each of Unilever PLC and Unilever NV contain the combined consolidated accounts of the two companies as well as that company's individual accounts.

10. Unilever NV and Unilever PLC are separate companies, with separate stock exchange listings and different shareholders. A shareholder cannot convert or exchange the shares of one for the shares of the other and the relative share prices on the various markets can, and do, fluctuate. However, over time, the prices of the NV Shares (as defined below) and the PLC Shares (as defined below) do stay in close relation to each other.

11. Unilever US has established the Omnibus Plan to aid in attracting and developing employees capable of ensuring the future success of Unilever US, Unilever Canada and their respective affiliates, by providing employees with an opportunity to have an ownership interest in Unilever NV and Unilever PLC.

12. The total number of Shares (as defined below) that may be delivered pursuant to the exercise or settlement of grants under the Omnibus Plan may not exceed (1) 40,500,000 Ordinary Shares of the New York Registry of Unilever NV (the "NV Shares") and (2) 65,500,000 American Shares, evidenced by American Depositary Receipts issued in New York (each representing four Ordinary Shares) of Unilever PLC (the "PLC Shares"). These limits may be adjusted by the Committee for a stock split, stock dividend, recapitalization, merger or reorganization, reclassification or other similar transaction or event affecting the NV Shares or the PLC Shares (collectively, the "Shares").

13. Under the Omnibus Plan the following type of grants may be made to, among others, the Employees:

(a) stock options ("Options") that grant the right to purchase NV Shares or PLC Shares at a specified exercise price during a specified period of time;

(b) stock awards, including matching shares ("Stock Awards") by way of a grant of NV Shares or PLC Shares that may, or may not, be subject to restrictions; and

(c) performance share awards, including phantom shares and other awards based upon, or otherwise related to NV Shares or PLC Shares ("Performance Shares") representing the right to receive an amount of Shares based on the fair market value of a Share, the appreciation in fair market value of a Share or such other measurement base as the Committee deems appropriate.

14. Shares will be purchased on the open market and then transferred to participants to satisfy grants under the Omnibus Plan.

15. The Omnibus Plan is administered by a committee (the "Committee") appointed by the board of directors of Unilever US. In Canada, Unilever U.S., with the assistance of Unilever Canada, or a person or company retained to act as a trustee, custodian or administrator under the Omnibus Plan (the "Administrator"), will be responsible for administering the Omnibus Plan, including the exercise of Options under the Plan.

16. Unilever U.S. intends to grant Options, Stock Awards and Performance Shares under the Omnibus Plan annually to the Employees.

17. Grants under the Omnibus Plan are not transferable by Employees except upon death or as permitted by the Committee.

18. Participation in the Omnibus Plan is voluntary and the Employees will not be induced to participate in the Omnibus Plan by expectation of employment or continued employment.

19. Since Unilever US is a subsidiary of Unilever NV and Unilever Canada is a subsidiary of Unilever PLC, Unilever Canada is not technically an "affiliated entity" of either Unilever NV or Unilever US for purposes of the Legislation and therefore:

(a) the exemptions from the Registration Requirements and the Prospectus Requirements are not available in respect of:

(i) the issue of Options by the Filer to Employees; or

(ii) the grant of Performance Shares by the Filer to Employees,

(b) the exemption from the Registration Requirements under the Legislation is not available in respect of the following trades:

(i) the transfer of Shares by the Filer to Current and Former Employees upon exercise of the Options;

(ii) the grant of Stock Awards by the Filer to Employees; nor

(iii) the transfer of Shares by the Filer to Current and Former Employees upon satisfaction of performance targets established as condition precedent to the payment of the Performance Shares,

(c) the exemption from the Registration Requirements is not available in respect of trades of the NV Shares by a Current and Former Employee; and

(d) the exemption from the Registration Requirements is not available to the Administrator in respect of trades in Options, Stock Awards, Performance Shares and Shares.

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");

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

THE DECISION of the Decision Makers under the Legislation is that:

1. the Registration Requirements and Prospectus Requirements shall not apply to the distribution of Options or Performance Shares by the Filer to an Employee pursuant to the Omnibus Plan;

2. the Registration Requirements shall not apply to any trades of:

(a) Shares made by the Filer to a Current and Former Employee upon the exercise of Options;

(b) Stock Awards made by the Filer to an Employee; or

(c) Shares made by the Filer to a Current and Former Employee upon payment of the Performance Shares;

3. trades in NV Shares by a Current and Former Employee shall not be subject to the Registration Requirements provided that:

(a) at the time the Options, the Performance Shares or the Stock Award, as the case may be, were issued or granted to the Current and Former Employee, Unilever NV and Unilever PLC were not reporting issuers in any jurisdiction in Canada;

(b) at the time the Options, the Performance Shares or the Stock Awards, as the case may be, were issued to the Current and Former Employee, residents of Canada,

(i) did not own directly or indirectly more than 10 percent of the outstanding NV Shares and PLC Shares, and

(ii) did not represent in number more than 10 percent of the total number of owners directly or indirectly of NV Shares and PLC Shares; and

(c) the NV Shares are traded through,

(i) an exchange, or a market, outside of Canada; or

(ii) to a person or company outside of Canada, and

4. the Registration Requirements shall not apply to any trades of Options, Stock Awards, Performance Shares and Shares by or through the Administrator provided that in respect of any trades in Shares made by the Administrator on behalf of a Current and Former Employee:

(a) at the time the Options, the Performance Shares or the Stock Awards, as the case may be, were issued to the Current and Former Employee, Unilever NV and Unilever PLC were not reporting issuers in any jurisdiction in Canada;

(b) at the time the Options, the Performance Shares or the Stock Awards, as the case may be, were issued to the Current and Former Employee, residents of Canada,

(i) did not own directly or indirectly more than 10 percent of the outstanding NV Shares and PLC Shares, and

(ii) did not represent in number more than 10 percent of the total number of owners directly or indirectly of the NV Shares and PLC Shares; and

(c) the Shares are traded through,

(i) an exchange, or a market, outside of Canada; or

(ii) to a person or company outside of Canada.

May 21, 2004.

"Susan Wolburgh Jenah"
"Suresh Thakrar"