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 vehicle, a fonds communs de placement d'enterprise (FCPE) -- The issuer is unable to rely on the employee prospectus exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions and the manager is unable to 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 an FCPE -- 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,R.S.O. 1990, c. S.5, as am., ss. 25, 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 Exemptions, s. 2.24.

October 9, 2015

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 THALES (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 (the "Prospectus Relief") so that such requirements do not apply to

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

(i) an FCPE named "World Classic Relais 2015" (the "Temporary Classic FCPE") which is a fonds commun 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) the "World Classic" compartment (the "Principal Classic Compartment") of an FCPE named Actionnariat Salarié Thales, which will merge with the Temporary Classic FCPE following the Employee Share Offering (as defined below), such transaction being referred to as the "Merger", as further described below (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 to or with Qualifying Employees (as defined below) resident in the Jurisdiction and in the Provinces of British Columbia and Québec (collectively, the "Canadian Employees," and the Canadian Employees who subscribe for Units, the "Canadian Participants"); and

(b) trades of ordinary shares of the Filer (the "Shares") by the Temporary Classic FCPE and/or the Principal Classic Compartment to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants;

2. an exemption from the dealer registration requirements of the Legislation (the "Registration Relief") so that such requirements do not apply to the Thales Group (as defined below and which, for clarity, includes the Filer and the Canadian Affiliates), the Temporary Classic FCPE, the Principal Classic Compartment and Amundi (the "Management Company") in respect of:

(a) trades in Units made pursuant to the Employee Share Offering to or with Canadian Employees; and

(b) trades in Shares by the Temporary Classic FCPE and/or the Principal Classic Compartment to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants.

(the Prospectus Relief and the Registration Relief, collectively, 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 and Québec.

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 under the Legislation or the securities legislation of any jurisdiction of Canada. The head office of the Filer is in France and the Shares are listed on Euronext Paris. The Filer is not in default under the Legislation or the securities legislation of any jurisdiction of Canada.

2. The Filer carries on business in Canada through certain affiliated companies (collectively, the "Canadian Affiliates" and, together with the Filer and other affiliates of the Filer, the "Thales Group"), including Thales Canada Inc. 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 under the Legislation or the securities legislation of any jurisdiction of Canada. The principal office of the Thales Group in Canada is located in Ontario and the greatest number of employees of Canadian Affiliates are employed in Ontario. None of the Canadian Affiliates is in default of the Legislation or the securities legislation of any other jurisdiction in Canada.

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 Temporary Classic FCPE and the Principal 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 Filer has established a global employee share offering for employees of the Thales Group (the "Employee Share Offering"). The Employee Share Offering involves an offering of Shares to be subscribed through the Principal Classic Compartment via the Temporary Classic FCPE, as further described in paragraph 9 (the "Classic Plan").

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

6. The Temporary Classic FCPE was established for the purpose of implementing this Employee Share Offering. The Principal Classic Compartment has been established for the purpose of implementing employee share offerings of the Filer, generally. There is no current intention for either the Principal Classic Compartment or the Temporary Classic FCPE to become reporting issuers under the Legislation or the securities legislation of any jurisdiction of Canada.

7. As set forth above, an FCPE (known in France as a fonds commun de placement d'entreprise) is a shareholding vehicle of a type commonly used in France for the conservation and custodianship of shares held by employee investors. The Principal Classic Compartment and the Temporary Classic FCPE 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.

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 will be the Canadian dollar equivalent of 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 CEO of the Filer (the "Reference Price"), less a 20% discount.

(b) For each two Shares that a Canadian Participant subscribes for under the Classic Plan up to a maximum of 24 Shares, and for each four Shares that a Canadian Participant subscribes for under the Classic Plan in addition to the first 24 Shares and up to a maximum of 72 Shares, the employer of such Canadian Participant will make a matching contribution to the Classic Plan, for the benefit of, and at no cost to, the Canadian Participant, in an amount equal to the subscription price for one additional Share under the Classic Plan (the "Employer Contribution").

(c) For clarity, the maximum amount of the Employer Contribution in respect of a Canadian Participant is an amount equal to the subscription price for 24 Shares under the Classic Plan.

(d) The Temporary Classic FCPE will apply the cash received from each Canadian Participant's subscription and the corresponding Employer Contributions to subscribe for Shares from the Filer. The Shares subscribed for will be held in the Temporary Classic FCPE and the Canadian Participant will receive one Unit in the Temporary Classic FCPE for each Share subscribed for, including Shares purchased with the Employer Contribution.

(e) 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 FCPE 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 Classic Plan will be held in the Principal Classic Compartment (the "Merger").

(f) 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 or termination of employment).

(g) Any dividends paid on the Shares held in the Classic Compartment will be contributed to the Classic Compartment and used to purchase additional Shares. The net asset value of the Units will be increased to reflect this reinvestment and no new Units will be issued.

(h) At the end of the Lock-Up Period, a Canadian Participant may (i) request the redemption of his or her Units in the Classic Compartment in consideration for the underlying Shares or a cash payment equal to the then market value of the Shares held by the Classic Compartment, or (ii) continue to hold his or her Units in the Classic Compartment and request the redemption of those Units at a later date in consideration for the underlying Shares or a cash payment equal to the then market value of the Shares.

(i) 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 and meeting the applicable criteria, a Canadian Participant may request the redemption of Units in the Classic Compartment in consideration for a cash payment equal to the market value of such Shares.

10. An FCPE is a limited liability entity under French law. The portfolio of each of the Principal Classic Compartment and the Temporary Classic FCPE will consist almost entirely of Shares, but may, from time to time, include cash in respect of dividends paid on the Shares which will be reinvested in Shares and cash or cash equivalents pending investments in Shares and for the purposes of Unit redemptions.

11. The Management Company is a portfolio management company governed by the laws of France. The Management Company is registered with the French AMF as an investment manager and complies with the rules of the French AMF. To the best of the Filer's knowledge, the Management Company is not, and has no current intention of becoming, a reporting issuer under the Legislation or the securities legislation of any jurisdiction of Canada, and to the best of the Filer's knowledge the Management Company is not in default under the Legislation or the securities legislation of any jurisdiction of Canada.

12. The Management Company's portfolio management activities in connection with the Employee Share Offering and the Classic Compartment are limited to purchasing Shares from the Filer, selling such Shares as necessary in order to fund redemption requests and investing available cash in cash equivalents.

13. 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 do not affect the underlying value of the Shares.

14. Shares purchased pursuant to the Employee Share Offering will be deposited in the Classic Compartment through CACEIS Bank France (the "Depositary"), a large French commercial bank subject to French banking legislation. 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.

15. The Unit value of the Classic Compartment will be calculated and reported to the French AMF on a regular basis, based on the net assets of the relevant FCPE divided by the number of Units outstanding. The value of Classic Compartment Units will be based on the value of the underlying Shares, but the number of Units of the Classic Compartment 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).

16. All management charges relating to the Classic Compartment and all costs in respect of the sale of the underlying Shares on the redemption of Units will be paid by the Classic Compartment's assets or by the Filer, as provided in the Classic Compartment's regulations.

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

18. The total amount invested by a Canadian Participant in the Employee Share Offering cannot exceed 25% of his or her estimated gross annual compensation for 2015. The Employer Contribution will not be factored into the maximum amount that a Canadian Employee may contribute.

19. 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 Employees with respect to an investment in the Shares or the Units.

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

21. Canadian Employees will receive an information package in the English or French language, according to their preference, which will include a summary of the terms of the Employee Share Offering and a description of Canadian income tax consequences of subscribing to and holding Units and requesting the redemption of Units at the end of the applicable Lock-Up Period.

22. Canadian Employees will have access to or may request a copy of the Filer's French Document de Référence filed with the French AMF in respect of the Shares and a copy of the rules of the Temporary Classic FCPE and the Principal Classic Compartment (which are analogous to company by-laws). The Canadian Employees will also have access to the continuous disclosure materials relating to the Filer that are furnished to holders of Shares.

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

24. There are approximately 1,511 Canadian Employees resident in the provinces of British Columbia, Ontario and Québec (with the greatest number, approximately 1,209, resident in Ontario), who represent, in the aggregate, approximately 2.5% of the number of employees in the Thales Group worldwide.

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 first trade is made

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

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

"Sarah B. Kavanagh"
Ontario Securities Commission
 
"Mary Condon"
Ontario Securities Commission