Securities Law & Instruments

Headnote

Dual application for Exemptive Relief Applications -- Application for relief from the prospectus and registration requirements, including in Ontario and Manitoba, for certain trades made in connection with an employee share 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 are 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 -- The number of Canadian participants and their share ownership are de minimis -- Relief granted, subject to conditions -- 5 year sunset clause.

Applicable Legislative Provisions

Securities Act (Ontario), ss. 25(1), 53(1), 74(1).

National Instrument 45-106 Prospectus Exemptions, ss. 2.14, 2.24.

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, s. 8.16.

June 1, 2018

TRANSLATION

IN THE MATTER OF THE SECURITIES LEGISLATION OF QUÉBEC AND ONTARIO (the Filing Jurisdictions) AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF VEOLIA ENVIRONNEMENT S.A. (the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Filing Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Filing 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 Principal Classic Units) of Sequoia Classique International (the Principal Classic Fund), a fonds commun de placement d'entreprise or "FCPE", a form of collective shareholding vehicle commonly used in France for the conservation or custodianship of shares held by employee-investors;

ii) units (the 2018 Classic Units) of a temporary FCPE named Sequoia Relais 2018 (the 2018 Classic Fund);

iii) units (together with the 2018 Classic Units, the Temporary Classic Units, and together with the 2018 Classic Units and the Principal Classic Units, the Classic Units) of future temporary FCPEs organized in the same manner as the 2018 Classic Fund (together with the 2018 Classic Fund, the Temporary Classic Funds (the term "Classic Fund" used herein means, prior to the Merger (as defined below), the Temporary Classic Fund and following the Merger, the Principal Classic Fund);

iv) units (the 2018 Guaranteed Units) of an FCPE named Sequoia Plus 2018 (the 2018 Guaranteed Fund); and

v) units (together with the 2018 Guaranteed Units, the Guaranteed Units, and together with the Classic Units, the Units) of future FCPEs organized in the same manner as the 2018 Guaranteed Fund (together with the 2018 Guaranteed Fund, the Guaranteed Funds, and together with the Principal Classic Fund and the Temporary Classic Funds, the Funds),

made pursuant to an Employee Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdictions (as defined below) (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 Funds to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants; and

c) trades of Principal Classic Units made pursuant to an Employee Offering to or with Canadian Participants, including upon a transfer of the Canadian Participants' assets in the relevant Guaranteed Fund to the Principal Classic Fund at the end of the applicable 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 Exemption Sought) so that such requirement does not apply to the Filer and its Local Related Entities (as defined below), the Funds and Ostrum Asset Management (formerly Natixis Asset Management) (the Management Company) in respect of the following:

a) trades in Units made pursuant to an Employee Offering to or with Canadian Employees;

b) trades in Shares by the Funds to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants; and

c) trades in Principal Classic Units made pursuant to an Employee Offering to or with Canadian Participants, including upon a transfer of the Canadian Participants' assets in the relevant Guaranteed Fund to the Principal Classic 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 Regulation 11-102 respecting Passport System (chapter V-1.1, r. 1) (Regulation 11-102) is intended to be relied upon in British Columbia, Manitoba and New Brunswick (together with the Filing Jurisdictions, the Jurisdictions); 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 Regulation 14-101 respecting Definitions (Chapter V-1.1, r.3), Regulation 11-102 and Regulation 45-106 respecting Prospectus Exemptions (chapter V-1.1, r.21) (Regulation 45-106) 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 formed under the laws of France. It is not and has no current intention of becoming a reporting issuer under the securities legislation of any 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 (the 2018 Employee Offering) and expects to establish subsequent global employee share offerings following 2018 for the next four years that are substantially similar (Subsequent Employee Offerings, and together with the 2018 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 Veolia 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 securities legislation of any jurisdiction of Canada.

3. As of the date hereof, "Local Related Entities" include V269 -- Merritt Operations Services LP, Greater Moncton Water Limited, Veolia Water Canada Inc., VWNA Winnipeg, Inc., Fort St-James Operations LP, Fort St-James Fuelco, Veolia Energy Projects Canada, Veolia Infrastructure Services, Veolia Health Op Services Montreal, Veolia Energy Canada Inc., Veolia Services Drummondville SEC, Veolia ES Canada Industrial Services, Veolia ES Canada Inc., Impérial Traitement Industriel Inc., Global Récupération Inc. and Sade Canada 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, 22 and 25, which may change (save for references to the 2018 Classic Fund, the 2018 Guaranteed Fund and the 2018 Employee Offering, which will be varied such that they are read as references to the relevant Temporary Classic Fund, the relevant Guaranteed Fund 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 (which term, for the purposes of this paragraph, is deemed to include all Shares held by the relevant Funds 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 Shares as shown on the books of the Filer.

6. Each Employee Offering is comprised of two subscription options:

a) an offering of Shares to be subscribed through the relevant Temporary Classic Fund, which will be merged with the Principal Classic Fund following completion of the Employee Offering (the Classic Plan); and

b) an offering of Shares to be subscribed through the relevant Guaranteed Fund (the Guaranteed Plan).

7. Only persons who are employees of an entity forming part of the Veolia 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 2018 Classic Fund and the 2018 Guaranteed Fund were established for the purpose of implementing the 2018 Employee Offering. The Principal Classic Fund was established for the purpose of implementing the Employee Offering generally. There is no current intention for any of the 2018 Classic Fund, the 2018 Guaranteed Fund or the Principal Classic Fund to become a reporting issuer under the securities legislation of any jurisdiction of Canada. There is no intention for any Temporary Classic Fund or future Guaranteed Fund that will be established for the purpose of implementing Subsequent Employee Offerings to become a reporting issuer under the securities legislation of any jurisdiction of Canada.

9. The 2018 Classic Fund, the 2018 Guaranteed Fund and the Principal Classic Fund have been registered with, and approved by, the Autorité des marchés financiers in France (the French AMF). It is expected that each Temporary Classic Fund and Guaranteed Fund established for Subsequent Employee Offerings will be registered with, and approved by, the French AMF.

10. All Units 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 offering in Canada (such as death, disability or termination of employment).

11. Under the Classic Plan, each Employee Offering will be made as follows:

a) Canadian Participants will subscribe for the relevant Temporary Classic Units, and the relevant Temporary Classic Fund will then subscribe for Shares using the Canadian Participants' contributions at a subscription price that is the Canadian dollar equivalent of the average opening price of the Shares (expressed in Euros) on Euronext Paris for the 20 consecutive trading days preceding the date of fixing of the subscription price (the Reference Price) by the chief executive officer, less a specified discount to the Reference Price.

b) Initially, the Shares subscribed for will be held in the relevant Temporary Classic Fund and the Canadian Participants will receive the relevant Temporary Classic Units.

c) Following the completion of an Employee Offering, the relevant Temporary Classic Fund will be merged with the Principal Classic Fund (subject to the decision of the supervisory board of the FCPE and the approval of the French AMF). The Temporary Classic Units held by Canadian Participants will be exchanged for Principal Classic Units on a pro rata basis and the Shares subscribed for under the Employee Offering will be held in the Principal Classic Fund (such transaction, the Merger). The Filer is relying on the exemption from the prospectus requirement pursuant to section 2.11 of Regulation 45-106 in respect of the issuance of Principal Classic Units to Canadian Participants in connection with the Merger.

d) Any dividends paid on the Shares held in the Classic Fund will be reinvested into the Classic Fund and used to purchase additional Shares. To reflect this reinvestment, the net asset value of the Units will be increased. No new Classic Units (or fractions thereof) will be issued to Canadian Participants.

e) At the end of the relevant Lock-Up Period, the Canadian Participant may:

i) request to have his or her Classic Units redeemed in consideration for the underlying Shares or a cash payment equal to the then market value of the underlying Shares; or

ii) continue to hold Classic Units in the Classic Fund and request to have those Classic Units redeemed at a later date.

f) 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 his or her Units in the Classic Fund in consideration for a cash payment equal to the then market value of the underlying Shares.

12. Under the Guaranteed Plan, each Employee Offering will be made as follows:

a) Canadian Participants will contribute up to the Canadian dollar equivalent of [EURO]500 to the relevant Guaranteed Fund (the Employee Contribution), and the Local Related Entities that employ the Canadian Participants will make a matching contribution on behalf of such Canadian Participants to the relevant Guaranteed Fund, up to the Canadian dollar equivalent of [EURO]500 gross (the Employer Contribution, and together with the Employee Contribution, the Total Contribution). For clarity, the maximum Total Contribution per Canadian Participant in an Employee Offering is the Canadian dollar equivalent of [EURO]1,000.

b) The relevant Guaranteed Fund will apply the cash received from the Total Contribution to subscribe for Shares at a subscription price that is equal to the Reference Price, less a specified discount to the Reference Price.

c) The Shares subscribed for will be held in the relevant Guaranteed Fund and the Canadian Participants will receive the relevant Guaranteed Units.

d) The relevant Guaranteed Fund will enter into a swap agreement (the Swap Agreement) with Société Générale (the Bank), which bank is governed by the laws of France. For any Subsequent Employee Offering, the "Bank" may change. In the event of such a change, the successor to the Bank will remain a large French commercial bank subject to French banking legislation.

e) Each Canadian Participant will have a guaranteed return equal to the sum of: (i) 100% of the Total Contribution; and (ii) a multiple of the Average Increase (as defined below) in the price of the Shares subscribed for on his or her behalf.

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

g) At the end of the applicable Lock-Up Period, the relevant Guaranteed Fund will owe to the Bank an amount equal to A -- [B+C], where:

i) "A" is the market value of all the Shares held in the relevant Guaranteed Fund at the end of the applicable Lock-Up Period (as determined pursuant to the terms of the Swap Agreement),

ii) "B" is the aggregate amount of all Total Contributions,

iii) "C" is an amount (the Appreciation Amount) equal to

a) a multiple of the Average Increase, if any, of the Shares above the Reference Price (where the "Average Increase" is the average price of the Shares based on the average closing price of the Shares in the last 44 days of the Lock-Up Period),

and further multiplied by

b) the number of Shares held in the relevant Guaranteed Fund.

In the event the Average Increase is lower than the Reference Price, the Reference Price will be used instead.

h) If, at the end of the Lock-Up Period, the market value of the Shares held in the relevant Guaranteed Fund is less than sum of 100% of the Total Contributions and the Appreciation Amount, the Bank will, pursuant to the terms and conditions of a guarantee contained in the Swap Agreement, make a contribution to the relevant Guaranteed Fund to make up such shortfall.

i) 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 Total Contribution; and

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

(the Redemption Formula).

j) If a Canadian Participant does not request the redemption of his or her Guaranteed Units at the end of the applicable Lock-Up Period, his or her investment will be transferred to the Principal Classic Fund (subject to the decision of the supervisory board of the FCPE and the approval of the French AMF). New Principal Classic Units will be issued to such Canadian Participants in recognition of the assets transferred to the Principal Classic Fund. Canadian Participants may request the redemption of the new Principal Classic Units whenever they wish. However, following a transfer to the Principal Classic Fund, Canadian Participants will not benefit from any guarantee on their investment.

k) Pursuant to the terms and conditions of guarantee contained in the Swap Agreement, a Canadian Participant will be entitled to receive 100% of his or her Total Contribution, as well as his or her portion of the Appreciation Amount (if any), at the end of the applicable 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 limited circumstances where it is in the best interests of the unitholders. The Management Company is required to act in the best interests of the unitholders of a Fund under French law. In the event that the Management Company cancelled the Swap Agreement and this was not in the best interests of the unitholders, then such unitholders would have a right of action under French law against the Management Company.

l) In the event of an Early Redemption, the Canadian Participant may request the redemption of Guaranteed Units using the Redemption Formula. 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.

m) Under no circumstances will a Canadian Participant be liable to any of the Guaranteed Fund, the Bank or the Filer for any amounts in excess of his or her Total Contribution under the Guaranteed Plan.

n) 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 Employer Contribution at the time such dividends are paid to the relevant Guaranteed Fund, notwithstanding the actual non-receipt of the dividends by the Canadian Participants.

o) The declaration of dividends on the Shares (in the ordinary course or otherwise) is strictly decided by the shareholders of the Filer. 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.

p) At the time the obligations of a Guaranteed Fund under the Swap Agreement are settled, the Canadian Participant will realize a capital gain (or capital loss) to the extent that amounts received by the relevant Guaranteed Fund, on behalf of the Canadian Participant, from the Bank exceed (or are less than) amounts paid by the Guaranteed Fund, on behalf of the Canadian Participant, to the Bank (including any dividend amounts paid to the Bank under the Swap Agreement). Capital losses (gains) realized by a Canadian Participant under the Swap Agreement 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).

q) The subscription price for an Employee Offering will not be known to Canadian Employees until after the end of the applicable subscription period. However, this information will be provided to Canadian Employees prior to the start of the revocation period, during which Canadian Participants may choose to revoke all (but not part) of their subscription under the Guaranteed Plan and thereby not participate in the relevant Employee Offering.

13. The portfolio of the Classic Fund will consist almost entirely of Shares and may also include cash in respect of dividends paid on the Shares which will be reinvested in Shares as discussed above. The portfolio of the Guaranteed Fund will primarily consist of Shares and as well as the rights and associated obligations under the Swap Agreement. The Funds may also hold cash or cash equivalents pending investments in Shares and for the purposes of facilitating Unit redemptions.

14. 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 obliged to act in the best interests of the Canadian Participants and is liable to them, jointly and severally with the Depositary (as defined below), for any violation of the rules and regulations governing FCPEs, any violations of the rules of the Fund, or for any self-dealing or negligence. The Management Company is not, and has no current intention of becoming, a reporting issuer under the securities legislation of any jurisdiction of Canada. For any Subsequent Employee Offering, the "Management Company" may change. In the event of such a change, the successor to the Management Company will comply with the terms and conditions described in this paragraph.

15. The Management Company's portfolio management activities in connection with an Employee Offering and the Funds 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.

16. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents. The Management Company's activities will not affect the value of the Shares.

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

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

19. Shares issued under an Employee Offering will be deposited in the relevant Fund's accounts with CACEIS Bank (the Depositary), a large French commercial bank subject to French banking legislation. For any Subsequent Employee Offering, the "Depositary" may change. In the event of such a change, the successor to the Depositary will remain a large French commercial bank subject to French banking legislation.

20. 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.

21. The total amount that may be invested by a Canadian Participant in an Employee Offering under both the Classic Plan and the Guaranteed Plan cannot exceed 25% of his or her estimated gross annual compensation for the relevant year. In addition, the total amount that may be invested by a Canadian Participant in an Employee Offering under the Guaranteed Plan cannot exceed the Canadian dollar equivalent of [EURO]500. The Employer Contribution will not be factored into the above maximum amounts that a Canadian Participant may contribute.

22. For the 2018 Employee Offering, annual compensation includes the employee's gross base salary, bonus and/or overtime paid between January 1, 2018 and December 31, 2018.

23. The Shares and Units are not currently listed for trading on any stock exchange in Canada and there is no intention to have the Shares or Units so listed. As there is no market for the Shares or Units in Canada, and as none is expected to develop, any first trades of Shares or Units by Canadian Participants will be effected through the facilities of, and in accordance with, the rules and regulations of Euronext Paris.

24. Canadian Participants will receive an information package in the French or English language according to their preference, which will include a summary 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 applicable Lock-Up Period. The information package for Canadian Participants in the Guaranteed Plan will also include a risk statement which will describe certain risks associated with an investment in Guaranteed Units. Canadian Employees will have access to the Filer's Document de Référence (in French and English) filed with the French AMF in respect of the Shares and a copy of the regulations of the relevant 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 the Shares. Canadian Participants will receive an initial statement of their holdings under the Classic Plan and/or the Guaranteed Plan, as applicable, together with an updated statement at least once per year.

25. For the 2018 Employee Offering, there are approximately 1,177 Canadian Employees, with the greatest number residing in Québec (815), and the remainder in the provinces of British Columbia, Manitoba, Ontario and New Brunswick, who represent in the aggregate less than 1% of the number of Qualifying Employees of the Veolia Group worldwide.

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 Exemption Sought is granted provided that:

1. with respect to the 2018 Employee Offering, the prospectus requirement will apply to the first trade in any Shares or Units 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 outside of Canada;

2. with respect to any Subsequent Employee Offering under this decision completed within five years from the date of this decision, the following conditions are met:

a) the representations other than those in paragraphs 3, 22 and 25 remain true and correct with the necessary adaptations in respect of that Subsequent Employee Offering; and

b) the conditions set out in paragraph 1 apply, with the necessary adaptations, to any such Subsequent Employee Offering.

"Lucie J. Roy"
Directrice principale du financement des sociétés