Securities Law & Instruments


Mutual Reliance Review System for Exemptive Relief Applications -- Application for relief from prospectus requirements in respect of certain trades in units of an employee savings fund made pursuant to an offering by French issuer -- Relief from registration and prospectus requirements upon the redemption of such units for shares of the issuer -- Relief from the registration and prospectus requirements granted in respect of first trade of such shares where such trade is made through the facilities of a stock exchange outside of Canada -- Relief granted to the manager of the fund from the adviser registration requirement.

Applicable Ontario Statutory Provisions

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


Multilateral Instrument 45-102 Resale of Securities.

November 26, 2004
















The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") for:

(i) an exemption from the dealer registration requirements and the prospectus requirements of the Legislation so that such requirements shall not apply to:

(i) certain trades in units ("Units") by a compartment (the "Compartment") of the Actionnariat Salarié Thales (the "Fund") made pursuant to the Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdictions who elect to participate in the Offering (the "Canadian Participants");

(ii) trades of ordinary shares of the Filer (the "Shares") by the Compartment to Canadian Participants upon the redemption of Units by Canadian Participants pursuant to the Offering; and

(iii) the first trade of any Shares acquired by Canadian Participants under the Offering; and

(ii) an exemption from the adviser registration requirements and dealer registration requirements so that such requirements shall not apply to the manager of the Fund, Crédit Agricole Asset Management (formerly known as Crédit Lyonnais Asset Management) (the "Manager"), to the extent that its activities in relation to the Offering require compliance with the adviser registration requirements and dealer registration requirements;

(collectively, the "Requested Relief").

Under the Mutual Reliance Review System for Exemptive Relief Applications

(a) the Québec Autorité des marchés financiers is the principal regulator for this application, and

(b) this MRRS decision document evidences the decision of each Decision Maker.


Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.


This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation formed under the laws of France, with a head office located in Neuilly-sur-Seine (Hauts de Seine), France. It is not and has no intention of becoming a reporting issuer (or equivalent) under the Legislation. The Shares are listed on Euronext Paris and Deutsche Börse.

2. The Filer carries on business in Canada through its affiliate, Thales Canada Inc. (the "Canadian Affiliate" and, together with the Filer and other affiliates of the Filer, the "Thales Group"). The Canadian Affiliate is a direct controlled subsidiary of the Filer and is not, and has no intention of becoming, a reporting issuer under the Legislation.

3. The Filer has established "Thales 2004 Offer", a worldwide stock purchase plan for employees of the Thales Group (the "Offering").

4. The Offering is subject to regulatory oversight by the French Autorité des marchés financiers ("French AMF").

5. Only persons who have been employees of a member of the Thales Group for a minimum of three months prior to the close of the offering period for the Offering, as well as certain former employees who have retired from an affiliate of the Thales Group and who continue to hold units in French investment funds (fonds commun de placement d'entreprise or "FCPEs") in connection with previous employee share offerings by the Filer (the "Former Employees" and together with the current employees of the Thales Group, the "Qualifying Employees") will be invited to participate in the Offering.

6. The Fund is an existing FCPE (which is subdivided into compartments) that has been used for previous employee share offerings of the Filer. The Fund was established to facilitate the participation of Qualifying Employees who choose to participate in the Offering ("Participants") and to simplify custodial arrangements for such participation. The Fund is not and has no intention of becoming a reporting issuer. The Shares purchased under the Offering will be held in the Compartment. Only Qualifying Employees will be allowed to hold Units of the Compartment in amounts proportionate to their respective investments in the Compartment.

7. Under the Offering:

(a) The "Purchase Price" for the Shares shall be the market price (the opening price on Euronext Paris) of the Shares on the date of sale, with the date of sale to be determined by the board of directors or the president acting on behalf of the board.

(b) The Shares were acquired by the Filer under its share repurchase program. Under the terms of such program, the Filer may not sell the Shares for less than 20 euros per share. Consequently, if the market price per share at the time that the price for this Offering is fixed is lower than 25 euros per share (i.e., the sum of 20 euros plus the cost of Plan Shares (as defined below), in a ratio of one for four), the Filer will be obliged to cancel this Offering and the purchase orders will be considered void.

(c) The Compartment will apply the amount of the Purchase Price contributed by Participants to subscribe for Shares.

(d) The Participants will receive Units in the Compartment representing the Purchase Price of the Shares and the Plan Shares (as defined below). They will receive one Unit for each Share purchased.

(e) For every four Shares acquired on behalf of a Participant, the Participant will receive, via the Compartment, at the same time as he/she receives the Shares purchased via the Compartment, one Share from the Filer, such Share being paid for by the Participant's employer ("Plan Shares"). Fractions of Plan Shares will be allocated in the event a number of Shares other than a multiple of four Shares is purchased by the Participant via the Compartment.

(f) The maximum number of Plan Shares that can be allocated to any Participant cannot exceed a value equivalent to the lower of (i) three times the Participant's contribution, and (ii) 3,450 euros.

(g) Any dividends paid on the Shares held in the Compartment will be received by the Compartment and reinvested in additional Shares to be held in the Compartment. The value of the Units will be increased to reflect such reinvestment.

(h) For Canadian federal income tax purposes, the Canadian Participants will be deemed to receive any dividends paid on the Shares held by the Fund on their behalf, at the time such dividends are received by the Fund. This will be the case notwithstanding the reinvestment of such dividend amounts by the Fund to acquire additional Shares on behalf of Canadian Participants. Consequently, the Canadian Participants will be required to fund the tax liabilities associated with the dividends without immediate recourse to the actual dividends.

(i) The Units issued pursuant to the Offering will be subject to a hold period of approximately five years (the "Lock-Up Period"), subject to certain exceptions prescribed by French law (such as a release on death or termination of employment).

(j) At the end of the Lock-Up Period, or in the event of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period prescribed by French law, a Canadian Participant may choose to redeem his or her Units in consideration for Shares represented by each Unit or a payment of an amount in cash equal to the then market value of the Shares represented by each Unit, or continue to hold the Units and redeem them at a later date.

(k) Participants must contribute a minimum of 120 euros in order to participate in the Offering. The total amount invested by a Canadian Participant in the Offering cannot exceed 25% of his or her estimated gross annual remuneration for 2004 (excluding the value of the Plan Shares), although a lower limit may be established by the Canadian Affiliate.

(l) The Filer will cancel this Offering in the event of a concurrent or imminent offering of Shares to Thales Group employees by the French State. The French State is a major shareholder of the Filer (through a holding company called TSA) and, under French privatisation law, were the French State or TSA to make any market sale of the Filer's Shares, they would be obliged to make an offering of Shares to the employees of the group. The Board of Directors of the Filer has decided that if the French State makes a public announcement, prior to the sale of the Shares under the present Offering, of a sale of Shares to employees of the Thales Group in accordance with the French privatisation laws, this Offering will be cancelled and the purchase orders will be considered void.

8. The Manager is a portfolio management company governed by the laws of France. The Manager is accredited and registered with the French AMF to manage French investment funds and complies with the rules of the French AMF. The Manager is not and has no intention of becoming a reporting issuer under the Legislation.

9. The Manager may, for the Compartment's account, acquire, sell or exchange all securities in the portfolio of the Compartment. The Compartment's portfolio will consist of Shares and may include cash in respect of dividends paid on the Shares and cash equivalents that the Compartment may hold pending investments in Shares and for purposes of Unit redemptions. The Manager's portfolio management activities in connection with the Offering and the Compartment are limited to purchasing Shares from the Filer using the Purchase Price and dividends received on the Shares, and selling such Shares as necessary in order to fund redemption requests.

10. The Manager is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of the Fund. The Manager's activities in no way affect the underlying value of the Shares. None of the Filer, the Manager, the Canadian Affiliate or any of their employees, agents or representatives will provide investment advice to the Canadian Participants with respect to an investment in the Shares or the Units.

11. Shares issued in the Offering will be deposited in the Compartment through Crédit Lyonnais (the "Depositary"), a large French commercial bank subject to French banking legislation.

12. Under French law, the Depositary must be selected by the Manager from among a limited number of companies identified on a list by the French Minister of the Economy, and its appointment must be approved by the French AMF. The Depositary carries out orders to purchase, trade and sell securities in the portfolio and takes all necessary action to allow the Fund to exercise the rights relating to the securities held in its portfolio.

13. Canadian Participants will not be induced to participate in the Offering by expectation of employment or continued employment.

14. The Canadian Participants will receive an information package in the French or English language, as applicable, which will include a summary of the terms of the Offering and a tax notice containing a description of Canadian income tax consequences of subscribing to and holding the Units and redeeming Units at the end of the Lock-Up Period.

15. Upon request, Canadian Participants may receive copies of the Document de Référence (in French or English) filed with the French AMF in respect of the Shares and a copy of the Fund's rules (which are analogous to company by-laws). The Canadian Participants will also receive copies of the continuous disclosure materials relating to the Filer furnished to the Filer's shareholders generally.

16. There are approximately 255 Qualifying Employees resident in Canada, in the provinces of Ontario (97), Québec (155) and Nova Scotia (3), who represent in the aggregate less than 1% of the number of Qualifying Employees worldwide.

17. There will be no market for the Shares or the Units in Canada. The Units will not be listed on any exchange.

18. As of the date hereof and after giving effect to the Offering, Canadian residents do not and will not beneficially own (which term, for the purposes of this paragraph, is deemed to include all Shares held by the Compartment on behalf of Canadian Participants) more than 10% of the Shares and do not and will not represent in number more than 10% of the total number of holders of the Shares as shown on the books of the Filer.


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 the Requested Relief is granted provided that:

1. the first trade in any Units or Shares acquired by Canadian Participants pursuant to this Decision, in a Jurisdiction, shall be deemed a distribution or a primary distribution to the public under the Legislation of such Jurisdiction; and

2. the first trade in Shares acquired by Canadian Participants pursuant to this Decision is executed through an exchange, or a market, outside of Canada, or to a person or company outside of Canada.

"Josée Deslauriers"
Directrice des marchés des capitaux
Autorité des marchés financiers (Québec)