Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from prospectus requirements for the first trades of common shares by Canadian shareholders after spin-off by a U.S. publicly traded company to investors by issuing shares of spun-off entity -- Distribution not covered by legislative prospectus exemptions -- There is no market for the securities of the issuer in Canada -- The number of Canadian participants and their share ownership arede minimis -- Relief granted, subject to conditions.

Applicable Legislative Provisions

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

National Instrument 45-106 Prospectus Exemptions, ss. 2.11, 2.31.

National Instrument 45-102 Resale of Securities, ss. 2.6 and 2.1.

TRANSLATION

May 31, 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 COMPAN (the Filer)

DECISION

Background

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 prospectus requirements contained in the Legislation in connection with the distribution (the Spin-Off) by the Filer of the shares of common stock of Perspecta Inc. (formerly Ultra SC Inc.) (SpinCo), a wholly-owned subsidiary of the Filer, by way of a dividend in specie to holders (Filer Shareholders) of shares of common stock of the Filer (Filer Shares) resident in Canada (Filer Canadian Shareholders).

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 11-102 respecting Passport System (chapter V-1.1, r. 1) (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 or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions (chapter V-1.1, r. 3) and Regulation 11-102 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 incorporated under the laws of Nevada with principal executive offices in Tysons, Virginia, U.S.A. The Filer is an independent information technology services company that provides next-generation information technology services that include applications modernization, cloud infrastructure, cyber security, and big data solutions.

2. The Filer is a reporting issuer in Québec and is not a reporting issuer under the securities legislation under any other jurisdiction of Canada and, currently, has no intention of becoming a reporting issuer under the securities legislation of any other jurisdiction of Canada.

3. The authorized share capital of the Filer consists of 750,000,000 Filer Shares and 1,000,000 shares of preferred stock. As at January 22, 2018, there were 285,687,865 Filer Shares and no shares of preferred stock issued and outstanding.

4. Filer Shares are listed on the New York Stock Exchange (NYSE) and trade under the symbol "DXC". Filer Shares are not listed or posted for trading on any exchange or market in Canada and, currently, the Filer has no intention of listing or posting its securities on any exchange or market in Canada.

5. The Filer is subject to the 1934 Act and the rules, regulations and orders promulgated thereunder.

6. Based on a report provided by Wells Fargo Shareowner Services, (the Filer's transfer agent), as of March 6, 2018, there were 669 registered Filer Canadian Shareholders (81 of whom are in Québec), representing approximately 1.3% of the registered shareholders of the Filer worldwide, holding 29,032 Filer Shares (4,398 of which are held in Québec), representing approximately 0.01% of the outstanding Filer Shares. The Filer does not expect these numbers to have materially changed since that date.

7. Based on a "Geographic Survey" of beneficial shareholders prepared by Broadridge Financial Services, Inc. obtained by the Filer as of March 16, 2018, there were 14,263 beneficial Filer Canadian Shareholders (2,670 of whom are in Québec), representing approximately 2.6% of the beneficial holders of Filer Shares worldwide, holding approximately 7,036,223 Filer Shares (1,256,155 of which are held in Québec), representing approximately 2.5% of the outstanding Filer Shares. The Filer does not expect these numbers to have materially changed since that date.

8. Based on the information above, the number of registered and beneficial Filer Canadian Shareholders and the proportion of Filer Shares held by such shareholders are de minimis.

9. The Filer is proposing to spin off its U.S. public sector business (SpinCo Business) into a newly formed company, SpinCo, through a series of transactions. These transactions are expected to result in the Spin-Off by the Filer, pro rata to its shareholders, of all of the outstanding common stock of SpinCo (SpinCo Shares) on the basis of one SpinCo Share for every two Filer Shares. After the Spin-Off, wholly-owned subsidiaries of SpinCo will immediately merge with Vencore Holding Corp. (Vencore) and KGS Holding Corp. (KGS) in a series of mergers (the Mergers), with Vencore Merger LLC (a newly created wholly-owned subsidiary of SpinCo) and KGS, ultimately being the surviving companies and continuing as wholly-owned subsidiaries of SpinCo. As part of the Mergers, all of the outstanding shares of Vencore and KGS common stock will ultimately be converted into approximately 11.38% and 2.65%, respectively, of the total number of Filer Shares then outstanding. As a result, approximately 86% of the Filer Shares will be held by pre-Merger SpinCo shareholders.

10. No fractional SpinCo Shares will be issued to shareholders of the Filer as part of the Spin-Off. SpinCo's transfer agent will aggregate fractional SpinCo Shares into whole SpinCo Shares, sell the whole SpinCo Shares through the facilities of the NYSE at prevailing rates and distribute the net cash proceeds pro rata to each Filer Shareholder who would otherwise have been entitled to receive fractional SpinCo Shares in the Spin-Off.

11. SpinCo is a Nevada corporation with principal executive offices in Herndon, Virginia, U.S.A. It is currently a wholly-owned subsidiary of the Filer and, at the time of the Spin-Off, will hold the Filer's SpinCo Business. Following the Mergers, SpinCo proposes to be an information technology services and mission solutions provider to government customers at the U.S. federal, state and local level.

12. As of the date hereof, all of the issued and outstanding SpinCo Shares are held by the Filer.

13. Filer Shareholders will not be required to pay any consideration for the SpinCo Shares, or to surrender or exchange Filer Shares or take any other action to receive their SpinCo Shares. The Spin-Off will occur automatically and without any investment decision on the part of Filer Shareholders.

14. Following the Spin-Off, SpinCo will cease to be a subsidiary of the Filer, and upon the Mergers, Vencore Merger LLC and KGS will be subsidiaries of SpinCo.

15. SpinCo has applied to have the SpinCo Shares listed on the NYSE.

16. After the completion of the Spin-Off, the Filer will continue to be listed and traded on the NYSE.

17. SpinCo is not a reporting issuer in any jurisdiction in Canada nor are its securities listed on any stock exchange in Canada. Pursuant to the Spin-off, SpinCo will become a reporting issuer under the Securities Act (Québec) (chapter V-1.1) by operation of law. To the knowledge of the Filer, SpinCo has no intention to become a reporting issuer in any other jurisdiction of Canada or to list its securities on any stock exchange in Canada after the completion of the Spin-Off.

18. The Spin-Off will be effected under the laws of the State of Nevada and the post Spin-Off Mergers will be effected under the laws of the State of Delaware.

19. Because the Spin-Off will be effected by way of a dividend of SpinCo Shares to Filer Shareholders, no shareholder approval of the Spin-Off is required (or being sought) under Nevada law.

20. In connection with the Spin-Off, SpinCo has filed with the SEC on February 8, 2018 a registration statement on Form 10 under the 1934 Act detailing the proposed Spin-Off, and subsequently filed amendments thereto on March 16, 2018, April 11, 2018 and April 30, 2018 (as amended, the Registration Statement).

21. After the SEC has completed its review of the Registration Statement, Filer Shareholders will receive a copy (or a notice of internet availability) of an information statement (the Information Statement) detailing the terms and conditions of the Spin-Off and forming part of the Registration Statement. All materials relating to the Spin-Off sent by or on behalf of the Filer and SpinCo in the United States (including the Information Statement or notice of internet availability of the Information Statement) will be sent concurrently to Filer Canadian Shareholders.

22. The Information Statement will contain prospectus level disclosure about SpinCo as required to comply with the SEC requirement for Form 10.

23. Filer Canadian Shareholders will have the same rights and remedies in respect of the disclosure documentation received in connection with the Spin-Off that are available to Filer Shareholders in the United States.

24. Following the completion of the Spin-Off, SpinCo will be subject to the requirements of the 1934 Act and the rules and regulations of the NYSE.

25. SpinCo will send concurrently to holders of its shares in Canada the same disclosure materials required to be sent under applicable United States securities laws to holders of its shares in the United States.

26. There will be no active trading market for the SpinCo Shares in Canada following the Spin-Off and none is expected to develop. Consequently, it is expected that any resale of SpinCo Shares will occur through the facilities of the NYSE or any other exchange or market outside of Canada on which the SpinCo Shares may be quoted or listed at the time that the trade occurs.

27. The distribution to Filer Canadian Shareholders of SpinCo Shares in connection with the Spin-Off would be exempt from the prospectus requirements pursuant to subsection 2.31(2) of Regulation 45-106 respecting Prospectus Exemptions (chapter V-1.1, r. 21) but for the fact that SpinCo will not be a reporting issuer at the time of the distribution under the securities legislation of any jurisdiction in Canada.

28. Neither the Filer nor SpinCo is in default of any securities legislation in 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 Exemption Sought is granted, provided that the first trade in the SpinCo Shares acquired pursuant to the Spin-Off will be deemed to be a distribution unless the conditions in section 2.6 of Regulation 45-102 respecting Resale of Securities (chapter V-1.1, r. 20) or the following conditions are satisfied:

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.

"Lucie J. Roy"
Director, Corporate Finance
Autorité des Marches Financiers