Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the prospectus and dealer registration requirements for certain trades made in connection with an employee share offering by a French issuer -- The offering involves the use of collective employee shareholding vehicles, each a fonds communs de placement d'entreprise (FCPE) -- The Filer cannot rely on the employee prospectus exemption in section 2.24 of National Instrument 45-106 Prospectus and Registration Exemptions and the Manager cannot rely on the plan administrator exemption in section 8.16 of National Instrument 31-103 Registration Requirements and Exemptions as the shares are not being offered to Canadian employees directly by the issuer but through the FCPEs -- Canadian employees will receive disclosure documents -- The FCPEs are subject to the supervision of the French Autorité des marchés financiers -- Relief granted, subject to conditions.

Applicable Legislative Provisions

Securities Act (Ontario), ss. 53, 74.

National Instrument 31-103 Registration Requirements and Exemptions, s. 8.16.

National Instrument 45-102 Resale of Securities, s. 2.14.

National Instrument 45-106 Prospectus and Registration Exemptions, s. 2.24.

April 5, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(THE "JURISDICTION")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

ARKEMA (THE "FILER")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for:

1. an exemption from the prospectus requirements of the Legislation{1} (the "Prospectus Relief") so that such requirements do not apply to:

(a) trades in units ("Units") of

(i) Arkema Actionnariat International (the "Fund", which is a fonds communs de placement d'entreprise or "FCPE"); and

(ii) Arkema Actionnariat International Relais 2010 (the "Temporary Fund", and together with the Fund, the "Funds") which will merge with the Fund following the completion of the Employee Share Offering (as defined below), such transaction being described as the "Merger" in paragraph 6(c) of the Representations. The term "Classic Fund" used herein means, prior to the Merger, the Temporary Fund, and following the Merger, the Fund;

made pursuant to the global employee share offering of the Filer (the "Employee Share Offering") to or with Qualifying Employees (as defined below) resident in the Jurisdiction and in Québec (the "Offering Jurisdictions") who elect to participate in the Employee Share Offering (the "Canadian Participants"); and

(b) trades of ordinary shares of the Filer (the "Shares") by the Funds to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants; and

2. an exemption from the dealer registration requirements of the Legislation{2} so that such requirements do not apply to the manager of the Funds, Crédit Agricole Asset Management (the "Manager"), to the extent that its activities described in paragraphs 9 and 10 of the Representations are subject to the dealer registration requirements of the Legislation (collectively, with the Prospectus Relief, the "Offering Relief").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application),

(a) the Ontario Securities Commission is the principal regulator for this application, and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in Québec.

Interpretation

Terms defined in National Instrument 14-101 Definitions, National Instrument 45-106 Prospectus and Registration Exemptions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

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

1. The Filer is a corporation formed under the laws of France. It is not, and has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of the other Offering Jurisdiction. The Shares are listed on Euronext Paris. The head office of the Filer is located in Paris, France.

2. The Filer carries on business in Canada through the following affiliate of the Filer: Arkema Canada Inc. (the "Canadian Affiliate," and together with the Filer and other affiliates of the Filer, the "Arkema Group"). The Canadian Affiliate is a directly or indirectly controlled subsidiary of the Filer and is not, and has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of the other Offering Jurisdiction. The head office of the Arkema Group in Canada is located in Burlington, Ontario.

3. As of the date hereof and after giving effect to the Employee Share 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 Funds 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.

4. Only persons who are employees of a member of the Arkema Group during the subscription period for the Employee Share Offering and who meet other employment criteria (the "Qualifying Employees") will be invited to participate in the Employee Share Offering.

5. As set forth above, the Funds are fonds communs de placement d'entreprise, or FCPEs, which is a shareholding vehicle of a type commonly used in France for the conservation or custodianship of shares held by employee investors, which must be registered with and approved by the Autorité des marchés financiers in France (the "French AMF") at the time of its creation. The Funds are established for the purpose of implementing the Employee Share Offering. There is no current intention for the Funds to become reporting issuers under the Legislation or under the securities legislation of the other Offering Jurisdiction. Only Qualifying Employees will be allowed to hold Units of the Funds and such holdings will be in an amount reflecting the number of Shares held by the Funds on their behalf.

6. Qualifying Employees will be invited to participate in the Employee Share Offering under the following terms:

(a) Canadian Participants will receive Units in the Temporary Fund, which will subscribe for Shares on behalf of the Canadian Participants at a subscription price that is equal to the price calculated as the average of the opening price of the Shares (expressed in Euros) on the 20 trading days preceding the date of the fixing of the subscription price by the Board of Directors of the Filer (the "Reference Price"), less a 20% discount. The subscription price will be the Canadian dollar equivalent of the Reference Price less the 20% discount.

(b) The Shares will be held in the Temporary Fund and the Canadian Participant will receive Units in the Temporary Fund.

(c) After completion of the Employee Share Offering, the Temporary Fund will be merged with the Fund (subject to the approval of the French AMF and the decisions of the supervisory board of the FCPEs). Units of the Temporary Fund held by Canadian Participants will be replaced with Units of the Fund on a pro rata basis and the Shares subscribed for under the Employee Share Offering will be held in the Fund (the "Merger").

(d) The Units 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, disability or involuntary termination of employment).

(e) At the end of the Lock-Up Period, a Canadian Participant may:

(i) request the redemption of his or her Units in the Fund in consideration for the underlying Shares or a cash payment equal to the then-market value of the Shares (expressed in Euros) held by the Fund; or

(ii) continue to hold Units in the Fund and request the redemption of those Units at a later date.

(f) In the event of an early redemption resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period prescribed by French law, the Canadian Participant may request the redemption of his or her Units in the Classic Fund in consideration for the underlying Shares or a cash payment equal to the then-market value of the Shares (expressed in Euros) held by the Classic Fund.

(g) Any dividends paid on the Shares held in the Classic Fund will be contributed to the Classic Fund and used to purchase additional Shares. To reflect this reinvestment, new Units (or fractions thereof) will be issued to participants.

7. The Classic Fund's portfolio will principally consist of Shares and may also include, from time to time, cash in respect of dividends paid on the Shares which will be reinvested in Shares. The Classic Fund may also hold cash or cash equivalents pending investments in the Shares and for the purposes of Unit redemptions.

8. The Manager is a portfolio management company governed by the laws of France. The Manager is registered with the French AMF to manage French investment funds. The Manager is not a reporting issuer under the Legislation or under the securities legislation of the other Offering Jurisdiction.

9. The Manager's portfolio management activities in connection with the Employee Share Offering and the Classic Fund are limited to purchasing Shares from the Filer using amounts contributed by Canadian Participants 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 Classic Fund. The Manager's activities do not affect the underlying value of the Shares and the Manager will not be involved in providing advice to any Canadian Participants.

11. Shares issued in the Employee Share Offering will be deposited in the Classic Fund through CACEIS Bank (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 maintained by the French Minister of the Economy, Finance and Industry 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 Classic Fund to exercise the rights relating to the securities held in its portfolio.

13. Participation in the Employee Share Offering is voluntary, and the Canadian-resident Qualifying Employees will not be induced to participate in the Employee Share Offering by expectation of employment or continued employment.

14. The total amount invested by a Canadian Participant in the Employee Share Offering cannot exceed 25% of his or her gross annual remuneration for the 2009 calendar year.

15. 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 Units.

16. The Shares are not currently listed for trading on any stock exchange in Canada and there is no intention to have the Shares so listed. As there is no market for the Shares in Canada, and as none is expected to develop, first trades of Shares by Canadian Participants will be effected through the facilities of, and in accordance with, the rules and regulations of Euronext Paris.

17. Canadian Participants will receive an information package in the English or French language, as applicable, which will include a summary of the terms of the Employee Share Offering and a description of the relevant Canadian income tax considerations relating to subscribing for and holding the Units in the Classic Fund and redeeming Units at the end of the Lock-Up Period.

18. Canadian Participants may also consult the Filer's annual report posted on the Filer's website and will have access to the continuous disclosure materials relating to the Filer that are furnished to the Filer's shareholders generally. In addition, upon request, a copy of the relevant Fund's rules (which are analogous to company by-laws) and the French Document de Référence filed with the French AMF in respect of the Shares will be available to participating employees.

19. There are approximately 62 Qualifying Employees resident in Canada in the provinces of Ontario and Québec, who represent, in the aggregate, less than 2% of the number of employees in the Arkema Group worldwide.

20. The Filer and the Canadian Affiliate are not in default under the Legislation or under the securities legislation of the other Offering Jurisdiction.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Offering Relief is granted provided that the prospectus requirements of the Legislation will apply to the first trade in any Units or Shares acquired by Canadian Participants pursuant to this decision unless the following conditions are met:

(a) the issuer of the security

(i) was not a reporting issuer in any jurisdiction of Canada at the distribution date, or

(ii) is not a reporting issuer in any jurisdiction of Canada at the date of the trade;

(b) at the distribution date, after giving effect to the issue of the security and any other securities of the same class or series that were issued at the same time as or as part of the same distribution as the security, residents of Canada

(i) did not own directly or indirectly more than 10% of the outstanding securities of the class or series, and

(ii) did not represent in number more than 10% of the total number of owners directly or indirectly of securities of the class or series; and

(c) the trade is made

(i) to a person or company outside of Canada, or

(ii) through the facilities of a stock exchange outside of Canada.

"Carol S. Perry"
Commissioner
Ontario Securities Commission
 
"James Turner"
Commissioner
Ontario Securities Commission

{1} Section 53 of the Securities Act (Ontario) (the "OSA").

{2} Section 25(1) of the OSA.