Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Application for relief from prospectus and dealer registration requirements in respect of certain trades in units made in connection with an employee share offering by a French issuer – Relief from prospectus and dealer registration requirements upon the redemption of units for shares of the 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 exemption in section 8.16 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations is not available as the Canadian employees are not employees of the FCPEs or a related entity of 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, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.16.
National Instrument 45-102 Resale of Securities, s. 2.14.
National Instrument 45-106 Prospectus and Registration Exemptions, s. 2.24.

June 14, 2016

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
SANOFI
(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:

(i)            units (the “Principal Classic Units”) of the Sanofi Shares FCPE (the “Principal Classic FCPE”), which is a fonds commun de placement d’entreprise or “FCPE,” a form of collective shareholding vehicle commonly used in France for the conservation of shares held by employee-investors; and

(ii)           units (together with the Principal Classic Units, the “Units”) of a temporary FCPE named Relais Sanofi Shares (the “Temporary Classic FCPE”), which will merge with the Principal 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 FCPE” used herein means, prior to the Merger, the Temporary Classic FCPE, and following the Merger, the Principal Classic FCPE);

made pursuant to the Employee Share Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdiction or in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador and Northwest Territories (collectively, the “Canadian Employees,” and Canadian Employees who subscribe for Units, the “Canadian Participants”); and

(b)           trades of ordinary shares of the Filer (the “Shares”) by the Classic FCPE 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 Sanofi Group (as defined below and which, for clarity, includes the Filer and the Canadian Affiliates (as defined below)), the Temporary Classic FCPE, the Principal Classic FCPE and Natixis Asset Management (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 Classic FCPE 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),

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

(d)           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 (together with the Jurisdiction, the “Jurisdictions”).

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:

3.             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 the other Jurisdictions. The head office of the Filer is located in France and the Shares are listed on Euronext and on the New York Stock Exchange (in the form of American Depositary Shares represented by American Depositary Receipts). The Filer is not in default under the Legislation or the securities legislation of the other Jurisdictions.

4.             The Filer carries on business in Canada through certain affiliated companies that employ Canadian Employees, including Sanofi-Aventis Canada Inc., Sanofi Consumer Health Inc./Sanofi Santé Grand Public Inc., Merial Canada Inc. and Sanofi Pasteur Limited (collectively, the “Canadian Affiliates,” and together with the Filer and other affiliates of the Filer, the “Sanofi 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 under the Legislation or the securities legislation of the other Jurisdictions. None of the Canadian Affiliates is in default under the Legislation or the securities legislation of the other Jurisdictions.

5.             The Filer has established a global employee share offering for employees of the Sanofi Group (the “Employee Share Offering”). 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 FCPE 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.

6.             The Employee Share Offering is comprised of one subscription option, being 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 decision of the supervisory boards of the FCPEs and the decision of the French AMF (defined below) (the “Classic Plan”).

7.             Only persons who are employees of a member of the Sanofi Group during the subscription period for the Employee Share Offering and who meet other employment criteria (the “Qualifying Employees”), will be permitted to participate in the Employee Share Offering.

8.             The Principal Classic FCPE and the Temporary Classic FCPE were established for the purposes of implementing employee share offerings and plans of the Filer. There is no current intention for these FCPEs to become reporting issuers under the Legislation or the securities legislation of the other Jurisdictions.

9.             FCPEs are a form of collective shareholding vehicle commonly used in France for the conservation of shares held by employee-investors. The Principal Classic FCPE 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.

10.          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 and adopted under the Classic Plan in Canada (such as a release on death or termination of employment).

11.          Under the Classic Plan, the subscription price will be the Canadian dollar equivalent of the average of the opening price of the Shares on Euronext (expressed in Euros) on the 20 trading days preceding the date of the launch of the Employee Share Offering by the Board of Directors of the Filer, or by the Chief Executive Officer of the Filer if so delegated by the Board of Directors, less a 20% discount.

12.          Sanofi will allocate for the benefit of, and at no cost to, each Canadian Participant:

(a)           one additional Share (a “Matching Share”) for any Canadian Participant who purchases no fewer than five and no more than nine Shares, and

(b)           two Matching Shares for any Canadian Participant who purchases ten or more Shares.

13.          The Temporary Classic FCPE will apply the cash received from each Canadian Participant’s subscription to subscribe for Shares from the Filer. The Shares subscribed for and the Matching Shares allocated by Sanofi to each Canadian Participant 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 and for each Matching Share received.

14.          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 supervisory board of the FCPEs 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.

15.          Any 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, new Units (or fractions thereof) will be issued.

16.          At the end of the Lock-Up Period, a Canadian Participant may (i) request the redemption of his or her Units in the Classic FCPE in consideration for a cash payment equal to the then market value of the underlying Shares, or (ii) continue to hold his or her Units in the Classic FCPE and request the redemption of those Units at a later date in consideration for a cash payment equal to the then market value of the underlying Shares. Subject to certain changes in the regulations of the Classic FCPE which may be made, a Canadian Participant may be permitted to request the redemption of his or her Units in the Classic FCPE in consideration for the underlying Shares (instead of a cash payment) at or after the end of the Lock-Up Period.

17.          In the event of an early unwind resulting from a Canadian Participant exercising one of the exceptions to the Lock-Up Period and meeting the applicable criteria, the Canadian Participant may request the redemption of Units in the Classic FCPE in consideration for a cash payment equal to the then market value of the Shares held by the Classic FCPE corresponding to such Units.

18.          An FCPE is a limited liability entity under French law. The Classic FCPE’s portfolio will consist almost entirely of Shares of the Filer and may, from time to time, also 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.

19.          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. 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 the other Jurisdictions.

20.          The Management Company’s portfolio management activities in connection with the Employee Share Offering and the Classic FCPE is 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.

21.          The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of the Classic FCPE. The Management Company’s activities do not affect the underlying value of the Shares. The Management Company is not in default of the Legislation or the securities legislation of the other Jurisdictions.

22.          Shares issued in the Employee Share Offering will be deposited in the Principal Classic FCPE and/or the Temporary Classic FCPE, as applicable, through CACEIS Bank France (the “Depositary”), a large French commercial bank subject to French banking legislation. 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 and the Temporary Classic FCPE to exercise the rights relating to the securities held in its respective portfolio.

23.          All management charges relating to the Classic FCPE will be paid from the assets of the Classic FCPE or by the Filer, as provided in the regulations of the Classic FCPE.

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

25.          The total amount invested by a Canadian Employee in the Employee Share Offering cannot exceed the lower of (i) 1,500 Shares and (ii) 25% of his or her estimated gross annual remuneration.

26.          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.

27.          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.

28.          Canadian Employees may consult an information package on the Employee Share Offering in the French or English 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 for and holding the Units and redeeming Units at the end of the Lock-Up Period. The information package will be available through a link that will be emailed to Canadian Employees; physical copies will be provided where delivery by e-mail is not feasible.

29.          Canadian Participants may also consult the Filer’s annual report on Form 20-F filed with the United States Securities and Exchange Commission as well as the French Document de Référence filed with the French AMF in respect of the Shares and a copy of the rules of each FCPE (which are analogous to company by-laws). Canadian Employees will also have access to copies of the continuous disclosure materials relating to the Filer that are furnished to holders of Shares generally.

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

31.          There are approximately 1,927 Qualifying Employees resident in Canada, with the greatest number resident in Ontario (approximately 1,515), and the remainder in the other Jurisdictions, who represent, in the aggregate, less than 2% of the number of employees in the Sanofi 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.

“Tim Moseley”                                                                      “William Furlong”
Commissioner                                                                     Commissioner
Ontario Securities Commission                                       Ontario Securities Commission