Securities Law & Instruments


Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – Application for relief from the prospectus and registration requirements for certain trades made in connection with an employee share offering by a French issuer – The offering will involve the use of a collective employee shareholding vehicle, a fonds communs de placement d'entreprise (FCPE) – The issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106Prospectus Exemptions or the plan administrator exemption in section 8.16 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations as the securities are not being offered to Canadian employees directly by the issuer but through the FCPE – Canadian participants will receive disclosure documents – The FCPE is subject to the supervision of the local securities regulator – Canadian employees will not be induced to participate in the offering by expectation of employment or continued employment – There is no market for the securities of the issuer in Canada – Relief granted without conditions – Relief granted based on the particular facts and circumstances of the application – Decision omits certain customary conditions and should not be used as a precedent in Ontario.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74.
National Instrument 45-106 Prospectus Exemptions,
s. 2.24.
National Instrument 45-102 Resale of Securities, s. 2.14.
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.16.

Translation

May 5 , 2017

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
(the “Jurisdictions”)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
UBISOFT ENTERTAINMENT S.A.
(the “Filer”)

DECISION


Background

The securities regulatory authority or regulator in each of the Jurisdictions (the “Decision Maker”) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the “Legislation”) for:

1.             an exemption from the prospectus requirement of the Legislation (the “Prospectus Relief”) so that such requirement does not apply to:

(a)           trades in units (the “2017 Units”) of the UBI SHARE OWNERSHIP 2017 compartment (the “2017 UBI FCPE Compartment”) of the UBI SHARE OWNERSHIP FCPE, a fonds commun de placement d’entreprise (“FCPE”), pursuant to the global employee share acquisition offer by the Filer (the “Employee Offering”) made by the 2017 UBI FCPE Compartment to or with Qualifying Employees (as defined below) resident in the Jurisdictions and in Nova Scotia who elect to participate in the Employee Offering (the “Canadian Participants”);

(b)           trades in units (the “Second FCPE Units”, together with the 2017 Units, the “Units” and each a “Unit”) of another FCPE or FCPE compartment established by the Filer in connection with the Employee Offering (the “Second FCPE”, together with the 2017 UBI FCPE Compartment, the “UBI FCPEs” and each a “UBI FCPE”) made by the Second FCPE pursuant to the Employee Offering to or with Canadian Participants pursuant to Redemption Subscriptions (as defined below) or the Default Windup Redemp-tion (as defined below); and

2.             an exemption from the dealer registration requirement of the Legislation (the “Registration Relief”, together with the Prospectus Relief, the “Exemptive Relief Sought”) so that such requirement does not apply to the Filer, the Canadian affiliates of the Filer, being Ubisoft Divertissements Inc., Hybride Technologies Inc. and Ubisoft Toronto Inc. (the “Canadian Related Entities”, and together with the Filer and other affiliates of the Filer, the “Ubisoft Group”), the UBI FCPEs and Amundi Asset Management (“Amundi”, or the “Manager”) in respect of:

(a)           trades in 2017 Units made pursuant to the Employee Offering to or with Canadian Participants;

(b)           trades in Second FCPE Units made pursuant to the Redemption Subscription or the Default Windup Redemption to or with Canadian Participants.

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a)           the Autorité des marches financiers is the principal regulator for this application;

(b)           the Filer has provided notice that subsection 4.7(1) of Regulation 11-102 respecting Passport System (“Regula-tion 11-102”) is intended to be relied upon in Nova Scotia; and

(c)           this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions, Regulation 11-102 and Regulation 45-106 respecting Prospectus Exemptions have the same meaning if used in this decision, unless otherwise defined herein.

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.

2.             The ordinary shares of the Filer (“Shares”) are listed on the Euronext Paris stock exchange (the “Exchange”).

3.             The Filer is not and does not intend on becoming a reporting issuer under the securities legislation in any of the jurisdictions of Canada.

4.             Each Canadian Related Entity is a direct or an indirect controlled subsidiary of the Filer and is not, and does not intend on becoming, a reporting issuer under the securities legislation in any of the jurisdictions of Canada.

5.             The Employee Offering is reserved for employees of the Filer’s related entities in France and elsewhere, including the Canadian Related Entities, in which the Filer directly or indirectly holds at least 80% of the share capital or voting rights, provided that such related entities participate in the Ubisoft Group International Savings Plan (“PEGI”).

6.             The Employee Offering is reserved for employees of the Ubisoft Group who belong to the PEGI and have at least three month’s seniority as determined by Ubisoft (the “Qualifying Employees”).

7.             Qualifying Employees will be invited to participate in the Employee Offering under the terms of the 2017 UBI FCPE Compartment, which is intended to provide Qualifying Employees with an opportunity to indirectly hold an investment in Shares.

8.             Only participants in the Employee Offering are allowed to hold 2017 Units.

9.             For purposes of the Employee Offering in Canada, there are currently approximately 3,808 Qualifying Employees resident in Canada, in the provinces of Québec (approximately 3,230), Ontario (approxi-mately 531) and Nova Scotia (approximately 47). The Qualifying Employees residing in Canada represent approximately 34% of the Qualifying Employees worldwide.

10.          Qualifying Employees will not be induced to participate in the Employee Offering by expecta-tion of employment or continued employment. Participation in the Employee Offering is optional and voluntary. The total amount invested by a Qualifying Employee in the Employee Offering cannot exceed 2.5% of his or her 2017 estimated gross annual compensation. During the Acqui-sition/Withdrawal Period (as defined below), the ceiling will be reduced to 0.25% of the Qualifying Employee’s 2017 estimated gross annual compensation.

11.          Qualifying Employees can indicate their intent to subscribe for an amount under the Employee Offering and make a reservation by filling out a reservation form during a prescribed reservation period (the “Reservation Period”). After the expiration of the Reservation Period, the sub-scription price is set and the acquisition period and withdrawal period commences (the “Acquisi-tion/Withdrawal Period”). During the Acquisi-tion/Withdrawal Period, an employee who has made a reservation may withdraw his or her subscription of 2017 Units under the Employee Offering. However, an employee who has not made a reservation may still subscribe.

12.          The 2017 UBI FCPE Compartment is a compartment of an FCPE, a collective shareholding vehicle of a type commonly used in France for investing in shares of an issuer by employee-investors. The 2017 UBI FCPE Compartment is established by the Manager and the Filer to facilitate the participation of Qualifying Employees in the Employee Offering and to simplify custodial arrangements for such participation.

13.          Each UBI FCPE must be registered and approved by the French Autorité des marchés financiers (“AMF France”) at the time of its creation.

14.          The UBI FCPEs are not and do not intend on becoming reporting issuers under the securities legislation in any of the jurisdictions in Canada.

15.          The Second FCPE is or will be an FCPE or FCPE compartment especially established by the Filer to invest in Shares. At the end of the Lock-Up Period (as defined below), Canadian Participants may, in lieu of a cash payment, elect to transfer the corresponding cash equivalent of the Initial Investment and the amount of the Performance (each as defined below) of their 2017 Units to the Second FCPE in exchange for Second FCPE Units (the “Redemption Subscription”). In the case that the Canadian Participants do not make any election, prior to its winding-up, the 2017 UBI FCPE Compartment will, under the default option, transfer the cash redemption value (the Initial Investment plus the amount of the Performance) of the 2017 Units to the Second FCPE to subscribe for, on behalf of the respective Canadian Participants, Second FCPE Units (the “Default Windup Redemption”).

16.          Pursuant to the Employee Offering, the 2017 UBI FCPE Compartment will invest in Shares.

17.          The Employee Offering is comprised of an offering of 2017 Units, to fund the acquisition of Shares by the 2017 UBI FCPE Compartment, to be subscribed as follows:

(a)           Canadian Participants will subscribe for 2017 Units for an amount per 2017 Unit equivalent to the Purchase Price (as defined below) paid by the 2017 UBI FCPE Compartment to acquire Shares. The Employee Offering will have a minimum investment amount per Canadian Participant, i.e. EUR 50. Canadian Participants will acquire 2017 Units in Canadian dollars, with the exchange rate to be determined at the same time as the Purchase Price. The value of a 2017 Unit is tied to the market price of the Shares. The value of 2017 Units will be adjusted on the basis of the market price of the Shares and other assets (e.g., cash) held by the 2017 UBI FCPE Compartment, effective from the first date on which the net asset value is calculated and whenever Shares or other assets are contributed to the 2017 UBI FCPE Compartment, as applicable.

(b)           For each cash investment made by a Canadian Participant in the Employee Offering (the “Employee’s Personal Payment”), the Filer will make a 300% cash contribution capped at an amount in Canadian dollars equivalent of EUR 900 net per Canadian Participant (the “Ubisoft Contribution”, together with the Employee’s Personal Payment, the “Initial Investment”). The net amount of the Ubisoft Contribution will be fully invested on behalf of the Canadian Participant to acquire additional 2017 Units.

(c)           The 2017 UBI FCPE Compartment will apply the cash received from (i) the Initial Investments and (ii) the Bank Upfront Payment (as defined below), to acquire Shares at the Purchase Price. The purchase price for a 2017 Unit will be equal to the Reference Price (as defined below), minus a 15% discount (the "Discount"), rounded up to the nearest euro cent (the “Purchase Price”). The reference price will be the volume weighted average prices (VWAP) of the Shares on the twenty days preceding the date on which the Filer’s board of directors (or its Chief Executive Officer acting by delegation) determines the Employee Offering period as well as the Purchase Price (the “Reference Price”).

(d)           Pursuant to the operation of a five year swap agreement (the “Swap”), entered into between the 2017 UBI FCPE Compartment (represented by the Manager), and the Crédit Agricole CIB (the “Bank”), whereby on the day of settlement and delivery of the Shares, the Bank provides to the 2017 UBI FCPE Compartment a cash amount (the “Bank Upfront Payment”) equal to nine times the sum of the Initial Investments, to be used by the 2017 UBI FCPE Compartment to acquire additional Shares from the Filer at the Purchase Price.

(e)           Under the Swap, dividends and any other financial rights on the Shares received by the 2017 UBI FCPE Compartment during the five-year period will be paid by the 2017 UBI FCPE Compartment to the Bank as and when received. Canadian Participants will not receive additional 2017 Units on account of dividends paid on Shares held in the 2017 UBI FCPE Compartment.

(f)            Canadian Participants will be subject to a five year lock-up period (the “Lock-Up Period”) and will be prohibited from disposing of or requesting repurchase of 2017 Units during the Lock-Up Period unless one of the following cases of early release occurs with respect to the Canadian Participant: (i) disability; (ii) termination of the employment; or (iii) death (the “Case of Early Release”).

(g)           At the end of the Lock-Up Period, or earlier if a Case of Early Release occurs and a Canadian Participant requests the repurchase of his or her 2017 Units: (i) the 2017 UBI FCPE Compartment will sell the corresponding number of Shares on the Exchange (the “Sale”) and pay the total proceeds from the Sale to the Bank; (ii) the Bank will pay to the 2017 UBI FCPE Compartment an amount corre-sponding to the sum of (a) the Initial Investment and (b) an amount equal to a multiple (under the Employee Offering, the multiple will be five) of the Protected Average Performance (as defined below) of the Shares corresponding to the employee's Initial Investment (the “Performance”); and (iii) the Canadian Participant will receive a cash amount equal to (a) the repayment of his or her Initial Investment, it being specified that only the euro amount of the Initial Investment is guaranteed and Canadian Participants will carry the risk of any fluctuations in the Canadian dollar/Euro exchange rate between the investment date and the date of redemption and (b) the amount of the Performance.

(h)           The Protected Average Performance represents the difference between (i) the average reference price, i.e., the average of the monthly market reference prices of the Shares over a 60-month period (with the 60-month period scheduled to commence on July 28, 2017, subject to Bank confirmation) (the “Average Refer-ence Price”) and (ii) the Reference Price (the “Protected Average Perform-ance”). The monthly market reference price is fixed on a pre-agreed business day of the month. The monthly market reference price shall be, for each month, the higher of (i) the market price of the Shares on that business day of the month in question and (ii) the Reference Price. If a Case of Early Release occurs and the Canadian Participant asks for the repurchase of his or her 2017 Units, in order to calculate the monthly market reference price for the remaining period between the month where the Case of Early Release occurs and the end of the 5 year period, the last monthly market reference price of the Shares for the month when the Case of Early Release occurs shall be used for the month of the Case of Early Release and every subsequent month up until the end of the 5 year period (to have 60 monthly market reference prices in order to determine the Average Reference Price).

(i)            The Canadian Participant may, in lieu of a cash payment at the end of the Lock-Up Period, elect to transfer the corresponding cash equivalent of the Initial Investment and the amount of the Performance of his or her 2017 Units to the Second FCPE in exchange for Second FCPE Units (i.e., the Redemption Subscription). The number of Second FCPE Units received will correspond to the Initial Investment and the amount of the Performance divided by the par value of the Second FCPE Units. The par value of a Second FCPE Unit will be based on the net assets of the Second FCPE divided by the number of Second FCPE Units outstanding. The Canadian Participant may redeem Second FCPE Units at any time, and upon redemption will only be entitled to the corresponding cash equivalent of the liquidation value of the Second FCPE Units (i.e., the market value of the assets within the Second FCPE divided by the number of Second FCPE Units). The investments made in the Second FCPE will not be guaranteed.

(j)            The Units held by a Canadian Participant are not transferable, except on the redemption of the Units held by the Canadian Participant (as described in paragraph 17(i)). Canadian Participants are not entitled to Shares upon the redemption of Units at the end of the Lock-Up Period (or earlier in the Case of Early Release).

(k)           The Units will not be listed on any stock exchange. The initial par value of a 2017 Unit will be equivalent to the Purchase Price. The value of the 2017 Units and the Second FCPE Units will be calculated and reported to the French AMF on a regular basis, based on the net assets of the respective UBI FCPE divided by the number of 2017 Units or the Second FCPE Units outstanding, as appropriate.

(l)            The 2017 UBI FCPE Compartment will be wound up shortly after the expiry of the Lock-Up Period (the “Wound Up FCPE”), with Shares held by the Wound Up FCPE being sold (as described in paragraph 17(g) above) and the cash redemption value (the Initial Investment plus the amount of the Performance) of those 2017 Units not redeemed by Canadian Participants, being automati-cally transferred by the Wound Up FCPE to the Second FCPE to subscribe, on behalf of the respective Canadian Participants, for Second FCPE Units at the same value as set out in paragraph 17(i) (i.e., the Default Windup Redemp-tion).

18.          Shares issued under the Employee Offering will be deposited in the UBI FCPEs through a custodian (the “Custodian”). The Custodian will carry out orders to purchase and sell securities, and take all necessary action to allow the UBI FCPEs to exercise the rights relating to the Shares held. The Custodian must carry out its activities in accordance with French law. The current Custodian is CACEIS Bank, a large French commercial bank.

19.          The UBI FCPEs are or will be established by the Manager and the Filer. The Manager will be a portfolio management company governed by the laws of France. The Manager will be registered with AMF France to manage French investment funds and will comply with the rules of AMF France. At present, the Manager of the 2017 UBI FCPE Compartment is Amundi Asset Management, a limited liability company registered in the Paris Trade and Companies Register. It is not and has no current intention of becoming a reporting issuer under the securities legislation in any of the jurisdictions of Canada, nor is it registered as an adviser or a dealer under the securities legislation in any of the jurisdictions of Canada. The Manager is not in default of securities legislation of any jurisdiction of Canada.

20.          The Manager’s portfolio management activities in connection with Employee Offering and the Redemption Subscription will be limited to acquiring Shares and selling such Shares as necessary in order to fund redemption requests. The Manager will be responsible for the daily operation of the UBI FCPEs and preparing the annual statement of the number, net asset value and the total value of Units each Canadian Participant holds in each of the UBI FCPEs (a “Statement of Account”). The Manager’s activities will in no way affect the value of the Shares or the Units.

21.          The management of the UBI FCPEs will be overseen by a separate supervisory board (the “Supervisory Board”) comprised of employee unitholders and management representatives of the Filer. The Supervisory Board’s duties will include, among other things, examining the UBI FCPEs’ management reports and annual accounts and reviewing major changes with respect to the UBI FCPEs.

22.          Administrative, accounting, audit, financial management and other expenses incurred by a UBI FCPE, including transaction fees relating to the acquisition and sale of Shares, will be borne by such UBI FCPE and paid from its assets.

23.          Canadian Qualifying Employees will receive an information package in French or English which will include a summary of the terms of the Employee Offering and a description of Canadian income tax consequences of subscribing for and holding 2017 Units and the redemption of 2017 Units at the end of the Lock-Up Period. The information package will also include a risk statement which will describe certain risks associated with an investment in 2017 Units.

24.          Canadian Participants will not receive any dividends declared by the Filer on the Shares held by the UBI FCPEs. Furthermore, the French AMF expressly requires the Manager to state in the information package provided to Qualifying Employees that employees will not receive any dividends from the Shares held by the UBI FCPEs.

25.          Qualifying Employees will have access, through the Filer’s website, to the Filer’s continuous disclosure furnished by the Filer to its shareholders generally.

26.          A copy of the rules of the UBI SHARE OWNERSHIP FCPE (which are analogous to company by-laws) will be made available to Qualifying Employees when they receive their application to subscribe for Units of the 2017 UBI FCPE Compartment. A copy of the rules of the Second FCPE will be made available to Canadian Participants prior to the end of the Lock- Up Period (i.e., prior to when such Canadian Participants choose between the redemption of their 2017 Units for cash or for Second FCPE Units).

27.          Each Canadian Participant will receive, at least annually, a Statement of Account.

28.          There are no circumstances under which a Canadian Participant would be required to contribute amounts in addition to their Employee Personal Payment other than certain tax and social security amounts payable pursuant to the Employee Offering.

29.          As of the date hereof and after giving effect to the Employee 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 UBI FCPEs on behalf of Canadian Participants) more than 10% of the Shares issued and outstanding 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.

30.          None of the Filer, the Manager, the Canadian Related Entities or any of their directors, officers, employees, agents or representatives will provide investment advice to the Qualifying Employees with respect to investments in the Units.

31.          Each UBI FCPE will pay fees to the Manager to cover the cost of running the UBI FCPE. These fees are or will be disclosed in the information package provided to Qualifying Employees as well as in the rules (which are analogous to company by-laws) of the respective UBI FCPE.

32.          The 2017 UBI FCPE Compartment may, through the Manager, cancel the Swap at any time provided that it is in the best interests of all the participants, including the Canadian Participants, to do so. If the 2017 UBI FCPE Compartment, through the Manager, cancels the Swap, Canadian Participants may, based on the market value of the Shares, receive an amount which is different (higher or lower) than the guaranteed amount to be paid at the end of the Lock-Up Period. In the event the Swap is cancelled and such actions are determined not to be in the best interests of the holders of Units, such holders have a right of action under French law against the Manager.

33.          Any dividends paid on the Shares held in the Second FCPE will be paid to the Second FCPE and the Second FCPE may either retain the cash proceeds in the Second FCPE or use them to purchase additional Shares on the Exchange. If the Second FCPE retains the cash proceeds in the Second FCPE, the par value of the Second FCPE Units will increase accordingly. If the Second FCPE purchases additional Shares on the Exchange with the cash proceeds, the Second FCPE may (i) issue additional Second FCPE Units to Canadian Participants, in which case the par value of the Second FCPE Units will not be adjusted accordingly or (ii) not issue any additional Second FCPE Units to Canadian Participants, in which case the par value of the Second FCPE Units will be adjusted accordingly.

34.          The 2017 UBI FCPE Compartment will hold no other securities aside from the Shares and cash-equivalents or money-market securities representing up to 10% of the value of the assets of the 2017 UBI FCPE Compartment to be used to pay redemption amounts pursuant to Cases of Early Release.

35.          None of the Filer, the Ubisoft Group or the UBI FCPEs are in default of any securities legislation of any jurisdiction of Canada.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemptive Relief Sought is granted.

“Lucie J. Roy”
Senior Director, Corporate Finance