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 6, 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

COMPAGNIE DE SAINT-GOBAIN

(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 (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) a compartment named Saint-Gobain Avenir Monde (the "Principal Classic Compartment") of a permanent FCPE named Saint-Gobain PEG Monde, which is a fonds communs de placement d'entreprise or "FCPE," a form of collective shareholding vehicle of a type commonly used in France for the conservation of shares held by employee-investors; and

(ii) a temporary FCPE named Saint-Gobain Relais Adhésion 2009 Monde (the "Temporary Classic FCPE") which will merge with the Principal Classic Compartment following the Employee Share Offering (as defined below), as further described as the "Merger" in paragraph 10 of the Representations (the term "Classic Compartment" used herein means, prior to the Merger, the Temporary Classic FCPE, and following the Merger, the Principal Classic Compartment);

made pursuant to the Employee Share Offering (as defined below) to or with Qualifying Employees (as defined below) of Canadian Affiliates (defined below) resident in the Jurisdiction and in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia who elect to participate in the Employee Share Offering (as defined below) (the "Canadian Participants");

(b) trades of ordinary shares of the Filer (the "Shares") by the Classic Compartment to Canadian Participants upon the redemption of Units thereof as requested by Canadian Participants; and

2. an exemption from the dealer registration requirements of the Legislation so that such requirements do not apply to the manager of the Classic Compartment, Axa Investment Managers Paris (the "Management Company"), to the extent that its activities described in paragraphs 15 and 17 of the Representations are subject to the adviser registration requirements and dealer registration requirements (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 British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick and Nova Scotia.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning as 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 (or equivalent) under the Legislation. The Shares are listed on Euronext Paris. The Filer is not in default of the securities legislation of any jurisdiction.

2. The Filer has established a global employee share offering for employees of the Saint-Gobain Group (the "Employee Share Offering"). The Filer carries on business in Canada through certain affiliated companies and the following affiliated companies will be participating in the Employee Share Offering: CertainTeed Gypsum Canada, Inc., CertainTeed Gypsum North American Services, Inc., Ceramics Hamilton Ltd., Saint-Gobain Ceramic Materials Canada Inc., Saint-Gobain Technical Fabrics Canada, Ltd. and CertainTeed Insurance Canada, Inc. (such participating affiliates, collectively, the "Canadian Affiliates," and together with the Filer and other affiliates of the Filer, the "Saint-Gobain Group"). Each of the Canadian Affiliates is a direct or indirect-controlled subsidiary of the Filer and is not, and has no current intention of becoming, a reporting issuer (or equivalent) under the Legislation. None of the Canadian Affiliates is in default of the securities legislation of any jurisdiction in Canada. The principal office of the Saint-Gobain Group in Canada is located in Mississauga, Ontario, and the greatest number of employees of Canadian Affiliates are employed in 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 Classic 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.

4. The Employee Share Offering is comprised of one subscription option which is an offering of Shares to be subscribed through the Temporary Classic FCPE, which compartment will be merged with the Principal Classic Compartment after completion of the Employee Share Offering, subject to the approval of the French AMF (defined below) and the supervisory board of the FCPE (the "Classic Plan").

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

6. The Classic Compartment has been established for the purpose of implementing the Employee Share Offering. There is no current intention for the Classic Compartment to become a reporting issuer (or equivalent) under the Legislation.

7. As set forth above, the Temporary Classic FCPE is, and the Principal Classic Compartment is a compartment of, an FCPE (a fonds communs de placement d'entreprise) which is a shareholding vehicle of a type commonly used in France for the conservation or custodianship of shares held by employee investors. Each of the Principal Classic Compartment and the Temporary Classic FCPE has been registered with the French Autorité des marchés financiers (the "French AMF"). Only Qualifying Employees will be allowed to hold Units of the Classic Compartment issued under the Employee Share Offering in an amount corresponding to their respective investments in the Classic Compartment.

8. All Units acquired in the Employee Share Offering by Canadian Participants 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).

9. Under the Classic Plan:

(a) The subscription price for Shares under the Classic Plan will be the price that is equal to the price calculated as the average of the opening price of the Shares on the 20 trading days preceding the date of the fixing of the subscription price by the Chief Executive Officer of the Filer, less a 20% discount.

(b) For each Canadian Participant that makes a contribution to the Classic Plan (such contribution, the "Employee Contribution"), the Canadian Affiliate employing such Canadian Participant will make a contribution to the Classic Plan, for the benefit of, and at no costs to, the Canadian Participant, of an amount equal to 10% of such Employee Contribution up to a maximum amount of $1,000 per Canadian Participant (the "Employer Contribution").

(c) The Temporary Classic FCPE will apply the cash received from the Employee Contributions and the cash received from the Employer Contributions to subscribe for Shares of the Filer.

10. Initially, the Shares subscribed for will be held in the Temporary Classic FCPE and the Canadian Participant will receive Units in the Temporary Classic FCPE. After completion of the Employee Share Offering, the Temporary Classic FCPE will be merged with the Principal Classic Compartment (subject to the approval of the French AMF and the supervisory board of the FCPEs). Units of the Temporary Classic Compartment held by Canadian Participants will be replaced with Units of the Principal Classic Compartment on a pro rata basis, and the Shares subscribed for under the Employee Share Offering will be held in the Principal Classic Compartment (the "Merger").

11. Under the Classic Plan, at the end of the Lock-Up Period, a Canadian Participant may request the redemption of Units in the Classic Compartment in consideration for the underlying Shares or a cash payment equal to the then market value of the Shares.

12. Under the Classic Plan, 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, a Canadian Participant may request the redemption of Units in the Classic Compartment in consideration for a cash payment equal to the then market value of the Shares.

13. Dividends paid on the Shares held in the Classic Compartment will be contributed to the Classic Compartment and used to purchase additional Shares. To reflect this reinvestment, new Units (or fractions thereof) of the Classic Compartment will be issued. The declaration of dividends on the Shares is determined by the board of directors of the Filer.

14. Under French law, the Temporary Classic FCPE is, and the Principal Classic Compartment is a compartment of, an FCPE which is a limited liability entity. The Classic Compartment's portfolio will consist almost entirely of Shares of the Filer. The Classic Compartment's portfolio, may, from time to time, include cash in respect of dividends paid on the Shares which will be reinvested in Shares, and, from time to time, the Classic Compartment's portfolio may include cash or cash equivalents that the Classic Compartment may hold pending investments in Shares and for the purposes of Unit redemptions.

15. The Management Company is a portfolio management company governed by the laws of France. The Management Company is registered with the French AMF to manage French investment funds and complies with the rules of the French AMF. The Management Company is not, and has no current intention of becoming, a reporting issuer (or equivalent) under the Legislation.

16. The Management Company's portfolio management activities in connection with the Employee Share Offering and the Classic Compartment are limited to subscribing for Shares from the Filer and selling such Shares as necessary in order to fund redemption requests.

17. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of the Classic Compartment. The Management Company's activities in no way affect the underlying value of the Shares, and the Management Company will not be involved in providing advice to any Canadian Participants.

18. Shares issued in the Employee Share Offering will be deposited in the relevant Compartment through BNP Paribas (the "Depositary"), a large French commercial bank subject to French banking legislation.

19. Under French law, the Depositary must be selected by the Management Company 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 Compartment to exercise the rights relating to the securities held in its portfolio.

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

21. The total amount invested by a Canadian Participant in the Employee Share Offering cannot exceed 25% of his or her gross annual compensation for the 2009 calendar year or 25% of his or her gross estimated 2010 annual compensation for the 2010 calendar year, whichever is greater.

22. None of the Filer, the Management Company, the Canadian Affiliates 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.

23. 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.

24. Canadian Participants who participate in the Employee Share Offering will receive statements at least once per year indicating the number of Units they hold and the value of each Unit.

25. The Canadian Participants will receive an information package in the French or English language, according to their preference, which will include a summary of the terms of the Employee Share Offering, a tax notice containing a description of Canadian income tax consequences of subscribing to and holding the Units in the Classic Compartment and requesting the redemption of Units for cash or Shares at the end of the Lock-Up Period.

26. Upon request, Canadian Participants may receive copies of the Filer's French Document de Référence filed with the French AMF in respect of the Shares and a copy of the Classic Compartment's rules (which are analogous to company by-laws). The Canadian Participants will also have access to copies of the continuous disclosure materials relating to the Filer that are furnished to holders of the Shares.

27. There are approximately 1217 Qualifying Employees of Canadian Affiliates resident in Canada in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick and Nova Scotia (with approximately 757 resident in Ontario), who represent, in the aggregate, less than 1% of the number of employees in the Saint-Gobain Group worldwide.

Decision

The principal regulator is satisfied that the test contained in the Legislation that provides the principal regulator with the jurisdiction to make the decision has been met.

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 first trade is made

(i) through the facilities of an exchange, or a market, outside of Canada, or

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

"James D. Carnwath"
Commissioner
Ontario Securities Commission
 
"Mary Condon"
Commissioner
Ontario Securities Commission

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