National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from dealer registration requirements in respect of first trade in shares made in connection with an employee stock purchase plan by a U.S. issuer -- Relief from dealer registration requirements requested upon the first trade of shares through a plan administrator -- Filer cannot rely on the plan administrator exemption in subsection 8.16(3) of NI 31-103 as the Filer is a reporting issuer in a Canadian jurisdiction -- Canadian employees will receive disclosure documents from plan administrator -- The plan administrator that executes first trade of shares is subject to the supervision of the U.S. Securities and Exchange Commission -- Relief granted -- In the case of future applications for relief, filers may wish to consider the potential availability of the dealer registration exemption in section 3.1 of OSC Rule 72-503 Distributions Outside Canada (in force March 31, 2018).
Applicable Legislative Provisions
Multilateral Instrument 11-102 Passport System, s. 4.7 (1).
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions, s. 3.6(6).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.16.
National Instrument 45-102 Resale of Securities, ss. 2.6, 2.14.
April 6, 2018
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 DXC TECHNOLOGY COMPANY (the Filer)
The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption (the Exemption Sought) from the dealer registration requirements contained in the Legislation so that such requirements do not apply to the Plan Administrators (as defined below) with respect to the first trade in shares of common stock of the Filer (Common Shares) issued upon the exercise or conversion of OIP Awards (as such term is defined below) issued pursuant to the DXC Technology Company 2017 Omnibus Incentive Plan (as may be amended from time to time) (the OIP).
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 (the Principal Regulator);
(b) the Filer has provided notice that section 4.7(1) of Regulation respecting Passport System (Regulation 11-102) is intended to be relied upon in each of the other jurisdictions of Canada, other than Ontario; and
(c) the decision is the decision of the Principal Regulator and evidences the decision of the securities regulatory authority in Ontario.
Terms defined in Regulation 14-101 respecting Definitions, Regulation 45-102 respecting Resale of Securities, Regulation 45-106 respecting Prospectus Exemptions and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined.
This decision is based on the following facts represented by the Filer.
1. The Filer is a corporation incorporated under the laws of Nevada with principal executive offices in Tysons, Virginia, U.S.A. The Filer is subject to the 1934 Act and the rules, regulations and orders promulgated thereunder.
2. Prior to March 31, 2017, the Filer (formerly, Everett Spinco, Inc.) was a wholly-owned subsidiary of Hewlett Packard Enterprise Company (HPE). HPE is a reporting issuer under the securities legislation of Québec. On March 31, 2017, the Filer became a reporting issuer under the securities legislation of Québec by operation of law as a result of the distribution by HPE of Common Shares to HPE's stockholders (Spin-Off). Effective April 1, 2017, New Everett Merger Sub Inc. (formerly, a wholly owned subsidiary of the Filer), merged with and into Computer Sciences Corporation (CSC), a company then listed on the New York Stock Exchange (the NYSE), as a result of which CSC continued as the surviving company (the Merger). CSC is now a wholly owned subsidiary of the Filer. The Filer does not presently intend to become a reporting issuer under the securities legislation of any other jurisdiction in Canada.
3. The authorized share capital of the Filer consists of 751,000,000 Common Shares with a par value of U.S.$0.01 each and 1,000,000 shares of preferred stock with a par value of U.S.$0.01 each. As at January 22, 2018, there were 285,687,865 Common Shares and no shares of preferred stock issued and outstanding. The Filer's Shares are listed on the NYSE under the symbol "DXC". The Common Shares are not listed on any Canadian stock exchange and the Filer does not presently intend to list its shares on any Canadian stock exchange.
4. As of November 21, 2017, residents of Canada did not own, directly or indirectly, more than 10% of the outstanding Common Shares and did not represent in number more than 10% of the total number of owners, directly or indirectly, of the Common Shares.
5. ESIT Canada Enterprise Services Co. and ESIT Advanced Solutions Inc. (collectively, the Canadian Affiliates) are wholly-owned subsidiaries of the Filer. The Canadian Affiliates are not and do not presently intend to become reporting issuers under the securities legislation of any jurisdiction in Canada or to list their securities on any stock exchange in Canada.
6. The Filer operates the OIP pursuant to which awards, including cash awards, stock awards, stock appreciation rights, restricted stock, restricted stock units (including performance-vested restricted stock units) and converted awards (which were issued to satisfy automatic adjustment and conversion of certain equity awards over CSC common stock and HPE common stock issued prior to the Spin-Off or Merger, as the case may be) (collectively, the OIP Awards) may be granted to eligible employees of the Filer or its affiliates, including the Canadian Affiliates (OIP Participants). Unless determined otherwise by the committee designated under the OIP, OIP Awards are non-transferable, other than by will or by the laws of descent or distribution or pursuant to certain domestic relations orders.
7. As of November 21, 2017, there were 57 OIP Participants in Canada holding approximately 1% of the outstanding OIP Awards.
8. Participation in the OIP is voluntary, and OIP Participants will not be granted OIP Awards or be induced to exercise same by expectation of employment or appointment or continued employment or appointment with the Filer or any other affiliated entity of the Filer.
9. OIP Participants in Canada who are granted OIP Awards will be provided with all the disclosure documentation that the Filer's employees resident in the United States who receive OIP Awards are entitled to receive.
10. OIP Participants will also have access to the continuous disclosure materials relating to the Filer that are furnished to holders of the Common Shares, generally.
11. The Filer uses the services of a plan administrator (the Plan Administrator) for the OIP. The Plan Administrator is currently Fidelity Stock Plan Services, LLC. The Plan Administrator, among other things, assists in the recordkeeping of the OIP, facilitates the issuance of OIP Awards and their exercise or conversion. Trades in Common Shares acquired under the OIP will be effected through the Plan Administrator, which is registered under applicable U.S. securities legislation to trade in securities in the category of broker-dealer.
12. The Filer, its Canadian Affiliates and the Plan Administrator, including their employees, agents or representatives, do not provide investment advice. The Plan Administrator is responsible for inquiries from OIP Participants, and their contact information will be included in the OIP documents.
13. As there is no active trading market for the Common Shares in Canada and none is expected to develop, it is expected that any trades of the Common Shares by OIP Participants, their legal representatives or permitted transferees, or the Plan Administrator will be effected through the facilities of the NYSE or any market or exchange outside of Canada on which the Common Shares may be quoted or listed or to a person or company outside of Canada.
14. An exemption from the dealer registration requirement of the Legislation is not available in the Jurisdictions for the first trade of the Common Shares acquired pursuant to the OIP, including trades effected through the Plan Administrator. Such an exemption would be available in respect of trades made by a plan administrator pursuant to section 8.16(3) of Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registration Obligations but for the fact that the Filer is a reporting issuer in Québec.
15. The Filer is not in default of any securities legislation in any jurisdiction of Canada.
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 Exemption Sought is granted provided that:
(a) at the time of the issuance of the Common Shares upon the exercise or conversion of OIP Awards (the Exercise Time), the Filer was not a reporting issuer in any jurisdiction of Canada except Québec;
(b) at the Exercise Time, after giving effect to the issuance of the Common Shares and any other Common Shares that were issued at the same time as or as part of the same distribution, residents of Canada:
(i) did not own directly or indirectly more than 10% of the outstanding Common Shares, and
(ii) did not represent in number more than 10% of the total number of owners directly or indirectly of Common Shares; and
(c) the trade is made:
(i) through an exchange, or a market, outside of Canada, or
(ii) to a person or company outside of Canada.