Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from prospectus requirements to allow U.S. parent company to spin-off shares of its U.S. subsidiary to investors -- distributions not covered by legislative exemptions -- U.S. parent company is a public company in the U.S. but is not a reporting issuer in Canada -- U.S. company has a de minimis presence in Canada -- following the spin-off, U.S. subsidiary will become an independent public company in the U.S. and will not be a reporting issuer in Canada -- no investment decision required from Canadian shareholders in order to receive distributions.

Applicable Legislative Provisions

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

November 24, 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 COMPUTER SCIENCES CORPORATION (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 an exemption (the "Exemption Sought") from the prospectus requirement of section 53 of the Securities Act (Ontario) (the "Act") in connection with the proposed distribution (the "Spin-Off") by the Filer of the shares of common stock of Computer Sciences Government Services Inc. (to be renamed "CSRA Inc.") ("CSGS"), a direct wholly-owned subsidiary of the Filer, by way of a dividend in specie to holders ("Filer Shareholders") of shares of common stock of the Filer ("Filer Shares") resident in Canada ("Filer Canadian Shareholders").

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 subsection 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in each of the other provinces and territories of Canada.

Interpretation

Terms defined in National Instrument 14-101 Definitions 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 incorporated in Nevada with principal executive offices in Falls Church, Virginia, U.S.A. The Filer is a provider of next generation information technology services and solutions.

2. The Filer is not a reporting issuer and, currently, has no intention of becoming a reporting issuer under the securities laws of any province or territory of Canada.

3. The authorized capital of the Filer consists of 750 million Filer Shares and one million shares of preferred stock. As of November 19, 2015, there were 139,128,158 Filer Shares and no shares of preferred stock issued and outstanding.

4. Filer Shares are listed on the New York Stock Exchange (the "NYSE") and trade under the symbol "CSC". Other than the foregoing listing on the NYSE, no securities of the Filer are listed or posted for trading on any exchange or market in Canada or outside of Canada. The Filer has no present intention of listing its securities on any Canadian stock exchange.

5. The Filer is subject to the United States Securities Exchange Act of 1934 (the "1934 Act") and the rules, regulations and orders promulgated thereunder.

6. Based on a report provided by Computershare Inc. (the Filer's transfer agent), as of October 31, 2015, there were 8 registered Filer Canadian Shareholders holding approximately 1,753 Filer Shares, representing approximately 0.14% of the registered shareholders of the Filer worldwide and holdings of approximately 0.0013% of the outstanding Filer Shares. The Filer does not expect these numbers to have materially changed since that date.

7. Based on a "Geographic Analysis Report" of beneficial shareholders prepared for the Filer by Broadridge Financial Solutions, Inc., as of September 15, 2015, there were 232 beneficial Filer Canadian Shareholders, representing approximately 1.14% of the beneficial holders of Filer Shares worldwide, holding approximately 587,240 Filer Shares, representing approximately 0.42% of the outstanding Filer Shares. The Filer does not expect these numbers to have materially changed since that date.

8. Based on the information above, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders are de minimis.

9. The Filer is proposing to spin off its mission-specific information technology, infrastructure and services businesses catering to United States federal, state and defense agencies (the "CSGS business") into a newly formed independent company, CSGS, through a series of transactions. These transactions are expected to result in the Spin-Off by the Filer, pro rata to its shareholders, of 100% of the outstanding shares in the common stock of CSGS ("CSGS Shares"). Each Filer Shareholder will receive one CSGS Share for each Filer Share. Immediately thereafter, holders of CSGS Shares will receive a special cash dividend of U.S.$10.50 per CSGS Share (of which U.S.$8.25 will be paid by CSGS and U.S.$2.25 will be paid by the Filer).

10. CSGS is a Nevada corporation with principal executive offices in Falls Church, Virginia, U.S.A. It is currently a wholly-owned subsidiary of the Filer that, at the time of the Spin-Off, will hold the Filer's CSGS business.

11. As of the date hereof, all of the issued and outstanding CSGS Shares, being 1,000 CSGS Shares, are held by the Filer, and no other shares or classes of stock of CSGS are issued and outstanding.

12. Fractional shares of CSGS Shares will not be distributed in connection with the Spin-Off. Fractional shares will be rounded down to the nearest whole share. There will be no pay-out of fractional shares.

13. Filer Shareholders will not be required to pay any consideration for the CSGS Shares, or to surrender or exchange Filer Shares or take any other action to receive their CSGS Shares. The Spin-Off will occur automatically and without any investment decision on the part of Filer Shareholders.

14. Following the Spin-Off, CSGS will cease to be a subsidiary of the Filer.

15. CSGS has applied to have the CSGS Shares listed on the NYSE under the symbol "CSRA" before the Spin-Off.

16. After the completion of the Spin-Off, the Filer will continue to be listed and traded on the NYSE.

17. CSGS is not a reporting issuer in any province or territory in Canada nor are its securities listed on any stock exchange in Canada. CSGS has no present intention to become a reporting issuer in any province or territory of Canada or to list its securities on any stock exchange in Canada after the completion of the Spin-Off.

18. The Spin-Off will be effected under the laws of the State of Nevada.

19. Because the Spin-Off will be effected by way of a dividend of CSGS Shares to Filer Shareholders, no shareholder approval of the proposed transaction is required (or being sought) under Nevada law.

20. In connection with the Spin-Off, CSGS has filed with the United States Securities and Exchange Commission (the "SEC") a registration statement on Form 10 (the "Registration Statement") under the 1934 Act, detailing the proposed Spin-Off. CSGS initially filed the Registration Statement with the SEC on July 10, 2015 and subsequently filed amendments to the Registration Statement on August 17, 2015, September 21, 2015, October 15, 2015, October 27, 2015, November 4, 2015 and November 6, 2015.

21. All materials relating to the Spin-Off sent by or on behalf of the Filer to holders of Filer Shares in the United States (including the information statement ("Information Statement") forming part of the Registration Statement) have been sent concurrently to Filer Canadian Shareholders.

22. The Information Statement contains prospectus level disclosure about CSGS.

23. Filer Canadian Shareholders who receive CSGS Shares pursuant to the Spin-Off will have the benefit of the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to Filer Shareholders resident in the United States.

24. Following the completion of the Spin-Off, CSGS will send concurrently to holders of CSGS Shares resident in Canada the same disclosure materials required to be sent under applicable United States securities laws to holders of CSGS Shares resident in the United States.

25. There will be no active trading market for the CSGS Shares in Canada following the Spin-Off and none is expected to develop. Consequently, it is expected that any resale of CSGS Shares distributed in connection with the Spin-Off will occur through the facilities of the NYSE.

26. The Spin-Off to Filer Canadian Shareholders would be exempt from the prospectus requirements pursuant to subsection 2.31(2) of National Instrument 45-106 Prospectus Exemptions but for the fact that CSGS is not a reporting issuer under the securities legislation of any jurisdiction in Canada.

27. Neither the Filer nor CSGS is in default of any securities legislation in any jurisdiction of Canada.

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 Exemption Sought is granted provided that the first trade in the CSGS Shares acquired pursuant to the Spin-Off will be deemed to be a distribution unless the conditions in section 2.6 or subsection 2.14(1) of National Instrument 45-102 Resale of Securities are satisfied.

"Tim Moseley"
Ontario Securities Commission
 
"Mary Condon"
Ontario Securities Commission