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 Offering by a French issuer – The issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions as the securities are not being offered to Canadian employees directly by the issuer but rather through special purpose entities – Canadian participants will receive disclosure documents – The special purpose entities of FCPE are subject to the supervision of the local securities regulator – Canadian participants 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 – The number of Canadian participants and their share ownership are de minimis – Relief granted, subject to conditions – five year sunset clause.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74.

May 16, 2017

TRANSLATION

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
VIVENDI 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 (the Prospectus Relief) so that such requirement does not apply to:

(a)           trades of:

(i)            units (the 2017 Units) of a compartment named Opus 17 Levier Canada (the 2017 Compartment), a compartment of 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 or custodianship of shares held by employee-investors named Opus Vivendi (the Fund, and together with the Compartments (as defined below) and the Transfer Fund (as defined below), the Funds); and

(ii)           units (together with the 2017 Units, the Units) of future compartments of the Fund organized in the same manner as the 2017 Compartment (together with the 2017 Compartment, the Compartments),

made under Vivendi Group Employee Savings Plan (PEG) to or with Qualifying Employees (as defined below) resident in the Jurisdictions (collectively, the Canadian Employees, and Canadian Employees who subscribe for Units, the Canadian Participants);

(b)           trades of ordinary shares of the Filer (the Shares) by the relevant Compartment and the Transfer Fund to or with Canadian Participants upon the redemption of Units and Transfer Fund Units (as defined below), respectively, as requested by Canadian Participants; and

(c)           trades of Transfer Fund Units made pursuant to an Employee Offering (as defined below) to or with Canadian Participants, including upon a transfer of the Canadian Participants’ assets in the relevant Compartment to the Transfer Fund at the end of the Lock-Up Period (as defined below); and

2.             an exemption from the dealer registration requirement (the Registration Relief, and together with the Prospectus Relief, the Offering Relief) so that such requirement does not apply to the Filer and its Local Related Entities (as defined below), the Funds and Société Générale Gestion (the Management Company) in respect of:

(a)           trades in Units made pursuant to an Employee Offering to or with Canadian Employees not resident in Ontario;

(b)           trades in Shares by the relevant Compartment and the Transfer Fund to or with Canadian Participants upon the redemption of Units and Transfer Fund Units, respectively, as requested by Canadian Participants; and

(c)           trades in Transfer Fund Units made pursuant to an Employee Offering to or with Canadian Participants, including upon a transfer of the Canadian Participants’ assets in the relevant Compartment to the Transfer Fund at the end of the applicable Lock-Up Period.

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

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

(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 Ontario; and

(c)           the 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 National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

“Related entity” has the same meaning given to such term in National Instrument 45-106 Prospectus Exemptions (NI 45-106) under the heading “Division 4 – Employee Executive Officer, Director and Consultant Exemptions”.

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

2.             The Filer carries on business in Canada through certain related entities and has established a global employee share offering under the PEG (the 2017 Employee Offering) and expects to establish subsequent global employee share offerings following 2017 for the next four years that are substantially similar (Subsequent Employee Offerings, and together with the 2017 Employee Offering, the Employee Offerings) for Qualifying Employees and its participating related entities, including related entities that employ Canadian Employees (Local Related Entities, and together with the Filer and other related entities of the Filer, the Vivendi Group). Each Local Related Entity is a direct or indirect controlled subsidiary of the Filer and no Local Related Entity has any current intention of becoming a reporting issuer under the Legislation or the securities legislation of any other jurisdiction of Canada. Currently, the greatest number of employees of Local Related Entities reside in Québec.

3.             As of the date hereof, “Local Related Entities” include Divertissements Gameloft Inc., Divertissements Gameloft Toronto Inc., Developpements Gameloft Inc., Universal Music Canada Inc. and TerraTerra Communications Inc. For any Subsequent Employee Offering, the list of “Local Related Entities” may change.

4.             Each Employee Offering will be made under the terms as set out herein and for greater certainty, all of the representations will be true for each Employee Offering other than paragraphs 3 and 29 which may change (save for references to the 2017 Compartment and the 2017 Employee Offering which will be varied such that they are read as references to the relevant Compartment and Subsequent Employee Offering, respectively).

5.             As of the date hereof and after giving effect to any Employee Offering, Canadian residents do not and will not beneficially own more than 10% of the Shares (which term, for the purposes of this paragraph, is deemed to include all Shares held by the relevant Compartment and the Transfer Fund on behalf of Canadian Participants) 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.

6.             Each Employee Offering involves an offering of Shares to be subscribed through the relevant Compartment of the Fund (the Leveraged Plan), subject to the decision of the supervisory boards of the FCPEs and the approval of the French AMF (as defined below).

7.             Only persons who are employees of an entity forming part of the Vivendi Group during the subscription period for an Employee Offering and who meet other employment criteria (the Qualifying Employees) will be allowed to participate in the relevant Employee Offering.

8.             The 2017 Compartment was established for the purpose of implementing the 2017 Employee Offering. The Fund was established for the purpose of implementing the Employee Offering generally. There is no current intention for any of the 2017 Compartment or the Fund to become a reporting issuer under the Legislation or the securities legislation of any other jurisdiction of Canada. There is no intention for any Transfer Fund that will be established for the purpose of receiving assets transferred at the end of the applicable Lock-Up Period or any future Compartment that will be established for the purpose of implementing Subsequent Employee Offerings to become a reporting issuer under the Legislation or the securities legislation of any other jurisdiction of Canada.

9.             The Fund, the 2017 Compartment and the Transfer Fund have been registered with, and approved by, the Autorité des marchés financiers in France (the French AMF). It is expected that each Compartment established for Subsequent Employee Offerings will be registered with, and approved by, the French AMF.

10.          Under the Leveraged Plan, each Employee Offering will be made as follows:

(a)           Canadian Participants will subscribe for Units, and the relevant Compartment will then subscribe for Shares using the Employee Contribution (as defined below) and certain financing made available by Société Générale (the Bank), which is a bank governed by the laws of France.

(b)           The subscription price will be the Canadian dollar equivalent of the average opening price of the Shares (expressed in Euros) on Euronext Paris for the 20 trading days preceding the date of the fixing of the subscription price (the Reference Price), less a specified discount to the Reference Price.

(c)           Canadian Participants will contribute 10% of the price of each Share to the relevant Compartment (the Employee Contribution). The relevant Compartment will enter into a swap agreement (the Swap Agreement) with the Bank. Under the terms of the Swap Agreement, the Bank will contribute the remaining 90% of the price of each Share to be subscribed for by the relevant Compartment (the Bank Contribution). The relevant Compartment will apply the cash received from the Employee Contribution and the Bank Contribution to subscribe for Shares.

(d)           Each Canadian Participant will receive Units in the relevant Compartment entitling him or her to the Euro amount of the Employee Contribution and a multiple of the Average Increase (as defined below) in the price of the Share subscribed for on his or her behalf.

(e)           Under the terms of the Swap Agreement, the relevant Compartment will remit to the Bank an amount equal to the net amount of any dividends paid on the Shares held in such Compartment.

(f)            The Units will be subject to a hold period of approximately five years (the Lock-Up Period), subject to certain exceptions provided for in the PEG and adopted for an Employee Offering (such as death, disability or involuntary termination of employment).

(g)           In the event of an early exit resulting from a Canadian Participant exercising one of the exceptions to the Lock-Up Period (Early Redemption), the Canadian Participant may request the redemption of Units from the relevant Compartment using the Redemption Formula (as defined below).

(h)           At the end of the applicable Lock-Up Period, the relevant Compartment will owe to the Bank an amount equal to the market value of the Shares held in the relevant Compartment (as determined pursuant to the terms of the Swap Agreement), less

(i)            100% of the Employee Contributions, plus the greater of:

(1)           a guaranteed annual return on the Employee Contributions, or

(2)           a multiple of the Participation Percentage (as defined below) multiplied by the quotient obtained from dividing the Reference Price by the Average Increase of the Shares, if any, and further multiplied by the difference between the Average Increase and the Reference Price (the Appreciation Amount).

(A)           The Participation Percentage will be determined for the relevant Offering and communicated to Canadian Participants prior to finalization of their subscriptions.

(B)           The Average Increase will be determined on the basis of a weekly average during the entire Lock-Up Period. In the event a closing price is less than the Reference Price, the Reference Price will be utilized.

(i)            If, at the end of the Lock-Up Period, the market value of the Shares held in the relevant Compartment is less than 100% of the Employee Contributions, the Bank will, pursuant to the terms and conditions of a guarantee contained in the Swap Agreement, make a contribution to the relevant Compartment to make up such shortfall.

(j)            At the end of the relevant Lock-Up Period, the Swap Agreement will terminate after the final swap payments. A Canadian Participant may then request the redemption of his or her Units in consideration for cash or Shares with a value representing:

(i)            the Canadian Participant’s Employee Contribution; and

(ii)           the Canadian Participant’s portion of the Appreciation Amount, if any

(the Redemption Formula).

(k)           Alternatively, the Canadian Participant may request the transfer of his or her investment to another FCPE or a compartment of an FCPE established under PEG (Transfer Fund) at the end of the Lock-Up Period.

(l)            If a Canadian Participant does not request the redemption of his or her Units in the relevant Compartment at the end of the Lock-Up Period (or their transfer to a Transfer Fund), his or her investment will be transferred to the relevant Transfer Fund as determined by the supervisory board of the FCPE and subject to the approval of the French AMF.

(m)          Units of the Transfer Fund (Transfer Fund Units) will be issued to Canadian Participants in recognition of the assets transferred to the Transfer Fund. Canadian Participants may request the redemption of the Transfer Fund Units whenever they wish. Once a Canadian Participant becomes a unitholder of the Transfer Fund, he or she will be able to request the redemption of Transfer Fund Units at any time in consideration of the underlying Shares or a cash payment equal to the then market value of the Shares held by the Transfer Fund. However, following a transfer to the Transfer Fund, the Employee Contribution and the Appreciation Amount will not be covered by the Swap Agreement (including the Bank’s guarantee contained therein).

(n)           Pursuant to the terms of the guarantee contained in the Swap Agreement, a Canadian Participant will be entitled to receive 100% of his or her Employee Contribution (in Euros) at the end of the Lock-Up Period or in the event of an Early Redemption. The Management Company is permitted to cancel the Swap Agreement (which will have the effect of cancelling the guarantee) in certain strictly defined conditions where it is in the best interests of the unitholders. Under no circumstances will a Canadian Participant be responsible to contribute an amount greater than his or her Employee Contribution.

(o)           In the event of an Early Redemption, a Canadian Participant may request the redemption of Units from the relevant Compartment. The value of the Units will be calculated in accordance with the Redemption Formula. The measurement of the increase, if any, from the Reference Price will be carried out in accordance with similar rules to those applied to redemption at the end of the Lock-up Period, but it will be measured using values of the Shares at the time of the Early Redemption instead.

11.          For Canadian federal income tax purposes, a Canadian Participant should be deemed to receive all dividends paid on the Shares financed by either the Employee Contribution or the Bank Contribution at the time such dividends are paid to the relevant Compartment, notwithstanding the actual non-receipt of the dividends by the Canadian Participants.

12.          The declaration of dividends on the Shares (in the ordinary course or otherwise) is strictly decided by the shareholders of the Filer on the proposition of the management board. The Filer has not made any commitment to the Bank as to any minimum payment of dividends during the term of the Lock-Up Period.

13.          To respond to the fact that, at the time of the initial investment decision relating to participation in an Employee Offering, Canadian Participants will be unable to quantify their potential income tax liability resulting from such participation, the Filer or its Local Related Entities are prepared to indemnify each Canadian Participant for all tax costs to the Canadian Participants associated with the payment of dividends in excess of a specified amount of Euros per calendar year per Share during the Lock-Up Period such that, in all cases, a Canadian Participant will, at the time of the original investment decision, be able to determine his or her maximum tax liability in connection with dividends received by the relevant Compartment on his or her behalf under an Employee Offering.

14.          At the time the relevant Compartment’s obligations under the Swap Agreement are settled, the Canadian Participant will realize a capital gain (or capital loss) by virtue of having participated in the Swap Agreement to the extent that amounts received by the relevant Compartment, on behalf of the Canadian Participant, from the Bank exceed (or are less than) amounts paid by the Compartment, on behalf of the Canadian Participant, to the Bank. Any dividend amounts paid to the Bank under the Swap Agreement will serve to reduce the amount of any capital gain (or increase the amount of any capital loss) that the Canadian Participant would have realized. Capital losses (gains) realized by a Canadian Participant may generally be offset against (reduced by) any capital gains (losses) realized by the Canadian Participant on a disposition of the Shares, in accordance with the rules and conditions under the Income Tax Act (Canada) or comparable provincial legislation (as applicable).

15.          Under French law, an FCPE is a limited liability entity. The portfolio of the Compartment will consist almost entirely of Shares as well as the rights and associated obligations under the Swap Agreement. The Compartment may also hold cash or cash equivalents pending investments in Shares and for the purposes of facilitating Unit redemptions.

16.          Any dividends paid on the Shares held in the Transfer Fund will be contributed to the Transfer Fund and used to purchase additional Shares on the stock market. To reflect this reinvestment, either new Transfer Fund Units (or fractions thereof) will be issued to Canadian Participants or no additional Transfer Fund Units will be issued and the net asset value of the existing Transfer Fund Units will be increased.

17.          The portfolio of the Transfer Fund will consist almost entirely of Shares, and may also include, from time to time, cash in respect of dividends paid on the Shares which will be reinvested in additional Shares as well as cash or cash equivalents held for the purpose of investing in the Shares and redeeming Transfer Fund Units.

18.          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. The Management Company is not, and has no current intention of becoming, a reporting issuer under the Legislation or the securities legislation of any other jurisdiction of Canada.

19.          The Management Company’s portfolio management activities in connection with an Employee Offering and the Compartment are limited to subscribing for Shares from the Filer, selling such Shares as necessary in order to fund redemption requests, investing available cash in cash equivalents, and such activities as may be necessary to give effect to the Swap Agreement. The Management Company’s portfolio management activities in connection with the Transfer Fund will be limited to purchasing Shares from the Filer using Canadian Participants’ entitlement under an Employee Offering at the end of the Lock-Up Period (i.e. a Canadian Participant’s Employee Contribution plus his or her portion of the Appreciation Amount, if any, based on the Redemption Formula), selling Shares held by the Transfer Fund as necessary in order to fund redemption requests, and investing available cash in cash equivalents.

20.          The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents in respect of the relevant Compartment and the Transfer Fund. The Management Company’s activities will not affect the value of the Shares.

21.          None of the entities forming part of the Vivendi Group, the Funds or the Management Company, or any of their directors, officers, employees, agents or representatives will provide investment advice to the Canadian Employees with respect to an investment in the Shares or the Units.

22.          None of the entities forming part of the Vivendi Group, the Funds or the Management Company is currently in default of securities legislation of any jurisdiction of Canada.

23.          Shares issued under an Employee Offering will be deposited in the relevant Compartment’s accounts or the Transfer Fund’s accounts, as the case may be, with Société Générale (the Depositary), a large French commercial bank subject to French banking legislation.

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

25.          The total amount that may be invested by a Canadian Participant in an Employee Offering cannot exceed 25% of his or her gross annual compensation (the calculation of the 25% investment limit takes into account the Bank Contribution).

26.          The Shares and the Units are not currently listed for trading on any stock exchange in Canada and there is no intention to have the Shares or the Units so listed.

27.          The Filer will retain a securities dealer registered as a broker/investment dealer (the Registrant) under the securities legislation of Ontario to provide advisory services to Canadian Employees resident in Ontario who express an interest in an Employee Offering and to make a determination, in accordance with industry practices, as to whether an investment in an Employee Offering is suitable for each such Canadian Employee based on his or her particular financial circumstances.

28.          Canadian Employees will receive an information package in the French or English language, according to their preference, which will include a description of the terms of the relevant Employee Offering and a description of Canadian income tax consequences of subscribing for and holding the Units and requesting the redemption of such Units at the end of the Lock-Up Period. Canadian Participants will have access to the Filer’s Document de Référence filed with the French AMF in respect of the Shares and a copy of the regulations of the relevant Compartment and Fund. The Canadian Employees will also have access to copies of the continuous disclosure materials relating to the Filer that are furnished to holders of Shares. Canadian Participants will receive an initial statement of their holdings under the Employee Offering together with an updated statement at least once per year.

29.          For the 2017 Employee Offering, there were approximately 770 Qualifying Employees resident in Canada, with the greatest number residing in the Province of Québec (approximately 500), representing less than 3.3% of the number of employees in the Vivendi Group worldwide eligible to participate in the 2017 Employee Offering.

Decision

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

The decision of the Decision Makers under the Legislation is that the Offering Relief is granted:

(a)           for the 2017 Employee Offering provided that:

(i)            the prospectus requirement 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:

(1)           the issuer of the security

(A)           was not a reporting issuer in any jurisdiction of Canada at the distribution date, or

(B)           is not a reporting issuer in any jurisdiction of Canada at the date of the trade;

(2)           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

(A)           did not own directly or indirectly more than 10% of the outstanding securities of the class or series, and

(B)           did not represent in number more than 10% of the total number of owners directly or indirectly of securities of the class or series;

(3)           the first trade is made

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

 (B)          to a person or company outside of Canada; and

(4)           in Québec, the required fees are paid in accordance with section 271. 6(1.1) of the Securities Regulations (Québec); and

(b)           for any Subsequent Employee Offering under this decision completed within five years from the date of this decision, provided that, (i) the representations other than those in paragraphs 3 and 29 remain true and correct in respect of that Subsequent Employee Offering, and (ii) the conditions set out in paragraph (a) above are satisfied as of the date of any distribution of a security under such Subsequent Employee Offering (varied such that any references therein to the 2017 Compartment and the 2017 Employee Offering are read as references to the relevant Compartment and the Subsequent Employee Offering, respectively).

“Hugo Lacroix”
Directeur principal des fonds d’investissement