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

SCHNEIDER ELECTRIC S.A.

(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) an FCPE named Schneider Actionnariat Mondial (the "Principal Classic FCPE"), 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;

(ii) a temporary FCPE named Schneider Relais International 2010 (the "Temporary Classic FCPE") which will merge with the Principal Classic FCPE following the Employee Share Offering (as defined below) as further described in paragraph 11 of the Representations; and

(iii) a compartment named Schneider International SAR 2010 (the "SAR Compartment") of an FCPE named Schneider Electric International,

made pursuant to the Employee Share Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdiction and in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick and Newfoundland and Labrador 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 Principal Classic FCPE, the Temporary Classic FCPE and the SAR Compartment to or with Canadian Participants upon the redemption of Units thereof as requested by Canadian Participants;

(c) the issuance of Units of the Principal Classic FCPE to holders of SAR Compartment Units upon a transfer of the Canadian Participants' assets in the SAR Compartment to the Principal Classic FCPE at the end of the Lock-Up Period (as defined below) in respect of Canadian Participants that do not request the redemption of their SAR Compartment Units; and

2. an exemption from the dealer registration requirements of the Legislation so that such requirements do not apply to the manager of the Principal Classic FCPE, the Temporary Classic FCPE and the SAR Compartment, AXA Investment Managers (the "Management Company"), to the extent that its activities described in paragraphs 25 to 27 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 Application 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, Nova Scotia, New Brunswick and Newfoundland and Labrador.

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 in Canada.

2. The Filer carries on business in Canada through the following affiliated companies: Schneider Electric Canada Inc., Power Measurement Ltd., Juno Lighting Ltd. and APC-MGE Critical Power & Cooling Services (collectively, the "Local Affiliates," together with the Filer and other affiliates of the Filer, the "Schneider Electric Group").{2} None of the Local Affiliates is in default of the securities legislation of any jurisdiction in Canada.

3. Each of the Local 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. The head office of Schneider Electric Group in Canada is located in Toronto, Ontario, more senior management of the Schneider Electric Group in Canada reside in Ontario than in any other Province, there are more assets of the Schneider Electric Group in Canada in Ontario than in any other Province and there are more clients of the Schneider Electric Group in Canada in Ontario than in any other Province.

4. As of the date hereof and after giving effect to the Employee Share Offering (as defined below), 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 Principal Classic FCPE, the Temporary Classic FCPE and the SAR 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.

5. The Filer has established a global employee share offering for employees of the Schneider Electric Group (the "Employee Share Offering"). The Employee Share Offering is comprised of two subscription options:

(a) an offering of Shares to be subscribed through the Temporary Classic FCPE, which Temporary Classic FCPE will be merged with the Principal Classic FCPE after completion of the Employee Share Offering (subject to the approval of the FCPE's supervisory board and the French AMF) (the "Classic Plan"); and

(b) an offering of Shares to be subscribed through the SAR Compartment (the "SAR Plan").

6. Only persons who are employees of a member of the Schneider Electric Group during the reservation period and the revocation 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. Canadian Participants may indicate the amount they wish to invest in the Employee Share Offering by completing and submitting a subscription/reservation order during a "reservation period." The subscription price will be set following the end of the reservation period, after which there will be a revocation period during which subscribers may cancel all or part of their reservations in the Classic Plan, the SAR Plan, or both, as applicable. If reservations are not revoked at the end of the revocation period, the initial reservation will become a binding subscription.

7. The Principal Classic FCPE, the Temporary Classic FCPE and the SAR Compartment have been established for the purpose of implementing the Employee Share Offering. There is no current intention for any of the Principal Classic FCPE, the Temporary Classic FCPE or the SAR Compartment to become reporting issuers (or equivalent) under the Legislation.

8. As set forth above, each of the Temporary Classic FCPE and the Principal Classic FCPE is, and the SAR 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. The Principal Classic FCPE, the Temporary Classic FCPE and the SAR Compartment have been registered with the French Autorité des marchés financiers (the "French AMF"). Only Qualifying Employees will be allowed to hold Units issued pursuant to the Employee Share Offering.

9. 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 provided for in the Schneider Electric International Employee Shareholding Plan (such as a release on death or termination of employment, or the exception that the Canadian Participant's employer ceases to be an affiliate of the Filer).

10. Under the Classic Plan, Canadian Participants will subscribe for Units in the Temporary Classic FCPE, and the Temporary Classic FCPE will then subscribe for Shares on behalf of Canadian Participants using the Canadian Participants' contributions at a subscription price that is equal to the average of the opening price of the Shares (expressed in Euros) on the 20 trading days preceding the date of fixing of the subscription price by the Management Board of the Filer (the "Reference Price"), less a 17% discount. The subscription price will be the Canadian-dollar equivalent of the Reference Price less the 17% discount.

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

12. The term "Classic FCPE" used herein means, prior to the Merger, the Temporary Classic FCPE, and following the Merger, the Principal Classic FCPE.

13. Under the Classic Plan, at the end of the Lock-Up Period a Canadian Participant may

(a) request the redemption of Units in the Classic FCPE in consideration for the underlying Shares or a cash payment equal to the then market value of the Shares, or

(b) continue to hold Units in the Classic FCPE and request the redemption of those Units at a later date.

14. Dividends paid on the Shares held in the Classic FCPE will be contributed to the Classic FCPE and used to purchase additional Shares. To reflect this reinvestment, no new Units will be issued. Instead, the reinvestment will increase the asset base of the Classic FCPE as well as the value of the Units held by Canadian Participants.

15. The Reference Price and Classic Plan subscription price will not be known to Canadian Participants until after the end of the subscription period. However, this information will be provided to Canadian Participants prior to the start of the revocation period, during which Canadian Participants may choose to revoke all of their subscription under the Classic Plan, the SAR Plan, or both and thereby not participate in the Employee Share Offering or reduce their investment in the Employee Share Offering.

16. Under the SAR Plan, Canadian Participants will subscribe for Units in the SAR Compartment using the Canadian-dollar equivalent of the Reference Price (the "Employee Contribution"), and the SAR Compartment will then subscribe for Shares using the Employee Contribution. The Local Affiliate that employs a Canadian Participant in the SAR Plan will have an obligation (the "SAR Obligation") to pay to such Canadian Participant a stock appreciation right bonus at the end of the Lock-Up Period (a "SAR") equal to the "Stock Appreciation Amount" (if any) plus the "Personal Contribution Protection Amount" (if any), as described below.{3}

17. The closing price of the Shares will be taken (in Euros) on each of the 120 trading days prior to the end of the Lock-Up Period (starting January 2, 2015) and an average of the Share price will be determined based on all such readings (the "Average Share Price"). If the Average Share Price (expressed in Euros) is greater than the Reference Price (expressed in Euros), then the "Stock Appreciation Amount" for each SAR Plan Unit at the end of the Lock-Up Period (excluding additional Units issued as a result of dividend reinvestment) will be an amount equal to a multiple of between three (3) and five (5) times the difference in Euros between the Average Share Price and the Reference Price. The multiple will be determined prior to the commencement of the reservation period. The payment of the "Stock Appreciation Amount" will be made in Canadian dollars at an exchange rate fixed on or about the payment date. If the Average Share Price (expressed in Euros) is less than the Reference Price (expressed in Euros), then the "Stock Appreciation Amount" will be zero.

18. If there is a diminution in value of a Canadian Participant's Employee Contribution in Canadian dollars as at the subscription date as compared to the market value of the Shares in Canadian dollars at the end of the Lock-Up Period, then the "Personal Contribution Protection Amount" will be an amount equal to any such diminution in value (excluding the impact of applicable taxes). The payment of this amount will be made in Canadian dollars. If the market value of the Shares in Canadian dollars at the end of the Lock-Up Period is greater than a Canadian Participant's Employee Contribution in Canadian dollars as at the subscription date, then the "Personal Contribution Protection Amount" will be zero.

19. Pursuant to the SAR Obligation, subject to local tax considerations, a Canadian Participant will be entitled to receive 100% of his or her Employee Contribution in local currency at the end of the Lock-Up Period or in the event of an early unwind. Under no circumstances will a Canadian Participant under the SAR Plan be responsible to contribute an amount greater than his or her Employee Contribution or be liable for any other amount.

20. Dividends paid on the Shares held in the SAR Compartment will be contributed to the SAR Compartment and used to purchase additional Shares. To reflect this reinvestment, new Units (or fractions thereof) will be issued. However, dividends may be paid out directly to Canadian Participants at their specific request. The form of such dividends is decided by the shareholders of the Filer at a shareholders meeting of the Filer and, therefore, may take the form of property other than cash, such as Shares.

21. At the end of the Lock-Up Period, a Canadian Participant may elect to request the redemption of his or her SAR Compartment Units in consideration for (a) cash in Canadian dollars equivalent to the market value of the underlying Shares or (b) the underlying Shares. Payment by the Canadian Participant's employer of an amount equal to the Canadian Participant's SAR (if any) will also be made at the end of the Lock-Up Period.

22. At the end of the Lock-Up Period, the employee contribution will not be covered by the SAR obligation. If a Canadian Participant does not request the redemption of his or her Units in the SAR Compartment, his or her investment in the SAR Compartment will be transferred to the Principal Classic FCPE. New Units of the Principal Classic FCPE will be issued to the Canadian Participant in recognition of the assets transferred to the Principal Classic FCPE. Canadian Participants may request the redemption of these new Units whenever they wish.

23. In the event of an early unwind resulting from the Canadian Participant satisfying one of the exceptions to the Lock-Up Period referenced above and meeting the applicable criteria, a Canadian Participant may request the redemption of Units from the SAR Compartment for cash consideration in accordance with a formula similar to redemptions after the end of the Lock-Up Period. However, in the event of an early unwind, the "Average Share Price" used in the formula will be determined as follows: (a) if the unwind occurs prior to January 1, 2015, the "Average Share Price" shall be the closing Share price on the last trading date of the month in which the early unwind event occurred; or (b) if the unwind occurs on or after January 1, 2015, the "Average Share Price" will be the average of the 120 closing prices of the Shares between January 2, 2015, and the date of the early unwind event. If this period has available less than 120 closing prices to calculate the average, the last actual closing price of the Shares shall be used for all remaining closing prices required to reach 120 closing prices so as to be able to calculate the average of 120 closing prices.

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

25. 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.

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

27. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of each of the Principal Classic FCPE, the Temporary Classic FCPE and the SAR 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 with respect to an investment in the Units.

28. Shares issued in the Employee Share Offering will be deposited in either the Principal Classic FCPE, the Temporary Classic FCPE or the SAR Compartment, as applicable, through BNP Paribas Securities Services (the "Depositary"), a large French commercial bank subject to French banking legislation.

29. 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 each of the Principal Classic FCPE, the Temporary Classic FCPE and the SAR Compartment to exercise the rights relating to the securities held in its respective portfolio.

30. The Unit value of the Classic FCPE and the SAR Compartment will be calculated and reported to the French AMF on a regular basis, based on the net assets of the Classic FCPE or SAR Compartment, as applicable, divided by the number of Units outstanding. The number of Units in the SAR Compartment will be adjusted on the basis of the market price of the Shares and other assets (cash, in exceptional circumstances) held by the SAR Compartment, effective from the first date on which the net asset value is calculated and whenever Shares or other assets are contributed to the SAR Compartment. No such adjustment will take place in respect of the Classic FCPE. The value of Classic FCPE Units will be based on the value of the underlying Shares, but the number of Units of the Classic FCPE will not correspond to the number of the underlying Shares (e.g., dividends will be reinvested in additional Shares and increase the value of each Unit).

31. All management charges relating to the Classic FCPE and the SAR Compartment will be paid from the assets of the relevant FCPE or compartment or by the Filer, as provided in the regulations of the applicable FCPE or compartment.

32. 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.

33. 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. In addition, the total amount invested by a Canadian Participant in the SAR Plan cannot exceed the lesser of (i) 5% of his or her gross annual compensation for 2009 or (ii) the Canadian dollar equivalent of €3,000. Notwithstanding the foregoing, the employer of a Canadian Participant shall have the discretion to permit a Canadian Participant to use his or her estimated gross annual compensation for the 2010 calendar year instead of actual 2009 gross annual compensation for the above-mentioned limits.

34. None of the Filer, the Management Company, the Local 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.

35. 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 relating to the Classic FCPE and the SAR Compartment containing a description of Canadian income tax consequences of subscribing to and holding Units of the Classic FCPE and/or the SAR Compartment and requesting the redemption of such Units for cash or Shares at the end of the Lock-Up Period, a reservation form (in electronic format), a revocation form (in electronic format) and a SAR Explanation Notice. These documents will be available in both English and French.

36. Upon request, Canadian Participants may receive copies of the Filer's French Document de Référence filed with the French AMF in respect of the Filer and a copy of the rules of the Temporary Classic FCPE, Principal Classic FCPE and SAR Compartment (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.

37. Canadian Participants will receive an initial statement of their holdings under the Classic Plan and/or SAR Plan, together with an updated statement at least once per year.

38. There are approximately 1,497 Qualifying Employees resident in Canada, in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia, New Brunswick, and Newfoundland and Labrador (with the greatest number, approximately 687 and 500, resident in British Columbia and Ontario, respectively), who represent, in the aggregate, less than 2% of the number of employees in the Filer Group worldwide.

39. The Units will not be listed on any exchange.

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:

1. 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.

2. prior to participating in the Employee Share Offering, each Canadian Participant will receive disclosure that:

(a) the Employee Share Offering is made through a person or company not registered under the Legislation as a dealer; and

(b) certain investor protections under the Legislation may not be available to the Canadian Participants who purchase or sell Units or Shares pursuant to or in connection with the Employee Share Offering.

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

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

{2} Schneider Electric Canada Inc., Power Measurement Ltd. and Juno Lighting Ltd. are Canadian Corporations. APC-MGE Critical Power & Cooling Services is a United States corporation that does business in Canada and employs Qualifying Employees resident in Canada.

{3} At the request of the Filer, the Local Affiliate will hedge its financial obligations resulting from the SARs by entering into a hedge agreement with a bank.