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Total S.A.
Headnote
National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from prospectus requirements in connection with an employee share offering by a foreign issuer -- issuer cannot rely on exemptions in sections 2.2, 2.24 in National Instrument 45-106 Prospectus and Registration Exemptions because securities are being offered indirectly to employees through special purpose entities -- issuer granted relief, subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c. S.5, as am., s. 74(1).
National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.2, 2.24.
May 27, 2013
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA AND ONTARIO
(THE JURISDICTIONS)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
TOTAL 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 an exemption from the prospectus requirement with respect to distributions of:
(a) units of Total Actionnariat International Relais 2013 (the Intermediary Fund) for the global employee share offering of the Filer for 2013 (the Current Employee Offering) to or with employees of Canadian affiliates of the Filer (the Canadian Affiliates), including Total E&P Canada Limited, Atotech Canada Ltd., Bostik Canada Ltd., CCP Composites Canada Inc., Sunpower Energy Systems Canada Corp., and Total Lubricants Canada Inc., who are on the payroll of a Canadian Affiliate at the end of the cancellation period or subscription period for the Current Employee Offering and who have been employed thereby at the closing of the cancellation period or subscription period and for at least a specified minimum period prior thereto (Qualified Canadian Participants);
(b) units of Total Actionnariat International Capitalisation (the Classic Fund, and together with the Intermediary Fund, the Classic Funds) to or with Qualified Canadian Participants;
(c) units of Total Int B Capital + Subfund (the +Fund) to or with Qualified Canadian Participants;
(d) units of the Classic Fund that occur as a result of the merger of any Intermediary Fund with the Classic Fund whereby Qualified Canadian Participants' units in an Intermediary Fund are exchanged for units of the Classic Fund;
(e) units of the Classic Fund that a Qualified Canadian Participant receives by virtue of any dividend paid on the common shares of the Filer (the Shares) held in the Classic Fund for Qualified Canadian Participants that results in the subsequent issuance of additional units of the Classic Fund to a Qualified Canadian Participant;
(f) units of the +Fund by a Qualified Canadian Participant to a Classic Fund; and
(g) units distributed in connection with a Subsequent Employee Offering (as described below and, together with the Current Employee Offering, an Employee Offering);
(collectively, the Exemptive Relief Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):
(a) the Alberta Securities Commission 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 Québec and 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 National Instrument 14-101 Definitions or in MI 11-102 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 common shares of the Filer are listed on the Euronext Paris Eurolist and on the New York Stock Exchange (in the form of American Depositary Shares).
3. The Filer is not and has no current intention of becoming a reporting issuer (or equivalent) under the securities legislation in any of the jurisdictions of Canada.
4. Each of the Canadian Affiliates is a direct or indirect controlled subsidiary of the Filer and is not, and has no current intention of becoming, a reporting issuer under the securities legislation in any of the jurisdictions of Canada.
5. Neither the Filer nor any of its Canadian Affiliates is in default of securities legislation in any of the jurisdictions of Canada.
6. Qualified Canadian Participants will be invited to participate in an Employee Offering under the terms of two subscription options: the "classic plan" (the Classic Plan) and the "capital + plan" (the Capital + Plan), both intended to provide Qualified Canadian Participants with an opportunity to indirectly hold an investment in the Shares.
7. A Subsequent Employee Offering will be similar to the Current Employee Offering, with each of the representations in paragraphs 8, 9, 11, 12, 13, 14, 15, 16, 17, 18, 19, and 23 through 34 hereof being applicable (save for the identities of particular special-purpose entities).
8. The Employee Offerings are and will be reserved for employees of the Filer or of controlled affiliates of the Filer (including Canadian Affiliates).
9. Only participants in an Employee Offering are allowed to hold units of the Classic Funds and the +Fund.
10. For the Current Employee Offering, there are approximately 450 Qualified Canadian Participants resident in Canada (approximately 79 in Québec, 1 in Nova Scotia, 117 in Ontario, and 253 in Alberta) who represent in aggregate less than 0.25% of the Filer's employees worldwide.
11. Qualified Canadian Participants will not be induced to participate in an Employee Offering by expectation of employment or continued employment. Participation in an Employee Offering is optional. The total cumulative amount invested by a Qualified Canadian Participant in an Employee Offering under both plans cannot exceed a specified percentage of his or her estimated gross annual remuneration or allocations for the calendar year in which an Employee Offering occurs.
12. Qualified Canadian Participants can indicate their intent to subscribe an amount under an Employee Offering and make a reservation by filling out a reservation form during a prescribed reservation period. After the expiration of the reservation period, the subscription price is set and a cancellation period or subscription period commences. During this cancellation period or subscription period, an employee who has made a reservation may withdraw his or her subscription from one or both plans. However, an employee who has not made a reservation may still subscribe.
13. The Classic Funds and the +Fund are and will be collective shareholding vehicles of a type commonly used in France for investing in shares of an issuer by employee-investors.
14. The Classic Funds and +Fund must be registered and approved by the French Autorité des marchés financiers (AMF France) at the time of their creation.
15. The Classic Funds and the +Fund are not and have no current intention of becoming reporting issuers under the securities legislation in any of the jurisdictions in Canada.
16. After each Employee Offering, the relevant Intermediary Fund and the Classic Fund will invest in Shares. From time to time, cash in respect of dividends paid on the Shares held in the Classic Funds will be reinvested in Shares. Classic Funds may also hold cash or cash equivalents pending investments in the Shares and for the purpose of unit redemptions.
17. After each Employee Offering, the +Fund will invest in Shares and may also hold cash or cash equivalents pending investments in the Shares and for the purpose of unit redemptions.
18. Under the Classic Plan, an Employee Offering will involve an offering of Shares to be subscribed through the Classic Funds as follows:
(a) Qualified Canadian Participants will subscribe for and be issued units of the relevant Intermediary Fund which will, in turn, subscribe for and hold Shares on behalf of the Qualified Canadian Participants;
(b) the subscription price for units of the Intermediary Fund will equal the average of the closing price of the Shares for a specified number of trading days ending on the date preceding the date of approval of an Employee Offering (the Reference Price), less a specified discount to the Reference Price;
(c) while the Shares remain in the Intermediary Fund, any dividends paid on the Shares held in the Intermediary Fund will increase the value of the units held by Qualified Canadian Participants;
(d) after completion of an Employee Offering, the Intermediary Fund will be merged with the Classic Fund, and the units of the Intermediary Fund held by Qualified Canadian Participants will be exchanged for units of the Classic Fund and the Shares previously held by the Intermediary Fund will be held in the Classic Fund;
(e) the units of the Classic Funds will be subject to a hold period of approximately five years from the issuance date (the Lock-Up Period), subject to certain exceptions prescribed by French law (such as a release on death, disability or termination of employment);
(f) any dividends paid on the Shares held in the relevant Intermediary Fund or the Classic Fund on behalf of a Qualified Canadian Participant, and any income and earnings on the assets in the Classic Fund held on behalf of a Qualified Canadian Participant, will be used by that fund to purchase more Shares, which will result in the issuance pro rata of additional units to its Qualified Canadian Participants;
(g) at the end of the Lock-Up Period, or in the event of an early release outlined under paragraph 18(e), a Qualified Canadian Participant may:
(i) redeem his or her units in the Classic Fund in consideration for the Qualified Canadian Participant's pro rata portion of the underlying Shares held in the Classic Funds or a cash payment equal to the net asset value of the units held by the Qualified Canadian Participant in the Classic Fund; or
(ii) continue to hold his or her units in the Classic Fund and redeem those units at a later date;
(h) units of Classic Funds held by Qualified Canadian Participants are not transferable, except:
(i) when such units are exchanged for units of the Classic Fund as a result of an Intermediary Fund merging with the Classic Fund; or
(ii) on the redemption of such units; and
(i) units of Classic Funds will not be listed on any exchange.
19. Under the Capital + Plan, an Employee Offering will involve an offering of Shares to be subscribed through the +Fund as follows:
(a) Qualified Canadian Participants will subscribe for and be issued units of the +Fund, which will, in turn, subscribe for Shares, at a subscription price that is equal to the Reference Price less a specified discount to the Reference Price;
(b) the +Fund will enter into a swap transaction (a Swap Transaction) with Credit Agricole Corporate and Investment Bank (the Bank) in order to provide support to the +Fund to enable it to provide a reliable rate of return on Qualified Canadian Participants' investments under the Capital + Plan. The Bank will benefit from the possible upside on the value of underlying Shares in the +Fund beyond what is necessary to support the rate of return guaranteed by the Bank. Under the Swap Transaction, the +Fund will receive from the Bank an amount equal to a specified multiple of the amounts subscribed to the +Fund by Qualified Canadian Participants and:
(i) the +Fund will:
A. pay to the Bank the amount of any dividends that it receives on Shares; and
B. at the end of the Lock-Up Period, or earlier in the case of early redemption (as outlined in paragraph 19(i)), transfer to the Bank all Shares held by the +Fund; and
(ii) the Bank will pay to the +Fund at the end of the Lock-Up Period, or earlier in the case of early redemption, for each unit, an amount equal to:
A. the amount subscribed for the unit by a Qualified Canadian Participant; plus
B. the greater of:
(1) a multiple of the Protected Average Increase (as described below) of a Share over the Reference Price (the Stake in the Protected Average Increase); and
(2) a specified annual capitalized return on the Qualified Canadian Participant's initial subscription (the Annual Compound Return);
(c) the +Fund, using money received by the +Fund from the Bank pursuant to the Swap Transaction, will subscribe for the number of Shares corresponding to the total of:
(i) the amounts subscribed by Qualified Canadian Participants; plus
(ii) a specified multiple of that subscription amount (the Multiple);
(d) the Filer will issue to the +Fund the number of Shares corresponding to (i) the amount subscribed by its Qualified Canadian Participants, multiplied by (ii) one plus the Multiple;
(e) the Shares will be held in the +Fund and its Qualified Canadian Participant subscribers will receive +Fund units;
(f) at the end of the Lock-Up Period (or earlier, in the case of a permitted early release) the Bank will pay to the +Fund, in respect of each of its Qualified Canadian Participants (and each such Qualified Canadian Participant will be entitled to receive from the +Fund on a redemption of a the +Fund unit) the amount subscribed to +Fund by the Qualified Canadian Participant, plus the greater of:
(i) the Stake in the Protected Average Increase; and
(ii) the Annual Compound Return (pro-rated in the event of an early release);
(g) the Protected Average Increase will be calculated on the basis of the greater of the Reference Price and the average of the price of Shares recorded twice per month between the date of approval of an Employee Offering and the end of the Lock-Up Period. The Multiple will be set after approval by AMF France.
(h) any dividends paid on Shares and any income and earnings on other assets held in the +Fund will not increase the value of +Fund units; rather, those amounts will be transferred to the Bank under the Swap Transaction as described above;
(i) the Lock-Up Period will apply to +Fund units, subject to certain early release exceptions prescribed by French law (such as a release on death, disability or termination of employment);
(j) units of the +Fund held by Qualified Canadian Participants are not transferable, except on redemption; and
(k) +Fund units will not be listed on any exchange.
20. The initial value of a unit of an Intermediary Fund will be approximately equal to the subscription price as described above in paragraph 18(b).
21. The value of a unit of the Classic Fund is tied to the market price of Shares, plus or minus 1%. The value of a unit any of the Classic Funds will be based on the relevant fund's net assets divided by the number of its units outstanding.
22. The initial value of a unit of the +Fund will be approximately equal to the subscription price, plus the specified discount, as described above in paragraph 19(a).
23. Subject to the Lock-Up Period hold requirement described above, the Classic Funds and the +Fund will redeem units at the request of a Qualified Canadian Participant, making payment in cash or the equivalent number of Shares. The amount payable on redemption of a unit of an Intermediary Fund or of the Classic Fund will be based on the per-unit net asset value of such fund. The amount payable on redemption of a +Fund unit will be as set out in paragraph 19(f). In addition, the Qualified Canadian Participant will also be able to transfer his or her assets in the +Fund to the Classic Fund in exchange for units of the Classic Fund.
24. It is anticipated that any resale by a Qualified Canadian Participant of Shares received on the redemption of units of the Classic Fund, of an Intermediary Fund or of the +Fund will be effected through the facilities of, and in accordance with the rules of, a foreign exchange.
25. Shares issued under an Employee Offering will be deposited in the relevant Intermediary Fund or in the +Fund through a depository (the Depositary). The Depositary will carry out orders to purchase and sell securities, and take all necessary action to allow the Classic Funds and +Fund to exercise the rights relating to the Shares held. The Depositary must carry out its activities in accordance with French law. The current Depository is CACEIS Bank France, a large French commercial bank.
26. The Classic Funds and the +Fund are or will be established by their respective managers (collectively, 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 each of the Classic Funds and +Fund is Amundi, 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.
27. The Manager's portfolio management activities in connection with Employee Offerings will be limited to purchasing Shares from the Filer and selling such Shares (in the case of the Classic Funds, in a marketplace (as defined in National Instrument 21-101 Marketplace Operation (a Marketplace)); and in the case of the +Fund, to the Bank) as necessary in order to fund redemption requests. The Manager will be responsible for preparing an annual statement of the number of units each Qualified Canadian Participant holds in the Classic Funds and +Fund at the end of the Qualified Canadian Participant's Lock-Up Period (a Statement of Account). The Manager will not be involved in providing advice to any Qualified Canadian Participant. The Manager of the +Fund will enter into a Swap Transaction with the Bank. A Manager's activities will in no way affect the underlying value of the Shares or of units of the Classic Funds or the +Fund.
28. The management of each of the Classic Funds and the +Fund will be overseen by a separate supervisory board (the Supervisory Board) comprised of management representatives of the Filer and employee unitholders from the various geographical zones in which the Filer operates. The Supervisory Board's duties will include, among other things, examining the relevant fund's management reports and annual accounts, reviewing major changes in such fund and making decisions about the merger, as applicable of an Intermediary Fund with the Classic Fund.
29. Administrative, accounting, audit and financial management expenses incurred by the Classic Funds and the +Fund will be paid by the Filer. Other expenses incurred by the Classic Funds and the +Fund, including transaction fees relating to the purchase or sale of Shares, will be borne by the respective fund and paid from its assets.
30. Qualified Canadian Participants will receive an information package in French or English, as they choose, which will include a summary of the terms of the applicable Employee Offering and a description of relevant Canadian income tax consequences.
31. Qualified Canadian Participants will have access, through the Filer's website, to the Filer's annual report on Form 20-F filed with the United States Securities and Exchange Commission and to the continuous disclosure furnished by the Filer to its shareholders generally.
32. A copy of the rules of the Classic Fund or of +Fund (analogous to company by-laws) will be made available to Qualified Canadian Participants when they receive their application to subscribe for units of an Intermediary Fund or of the +Fund, respectively.
33. Each Qualified Canadian Participant will receive, at least annually, a Statement of Account.
34. As of the date hereof and after giving effect to the Employee Offering, Qualified Canadian Participants do not and will not beneficially own more than 10% of the Shares 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.
Decision
Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decision has been met.
The decision of the Decision Makers under the Legislation is that the Exemptive Relief Sought is granted:
(a) for the Current Employee Offering provided that:
(i) the first trade in any security acquired by a Qualified Canadian Participant pursuant to this decision, in a Jurisdiction, is deemed to be a distribution or a primary distribution to the public under the Legislation of such Jurisdiction unless the following conditions are met:
A. the issuer of the security:
(1) was not a reporting issuer in any jurisdiction of Canada at any time during the distribution; and
(2) is not a reporting issuer in any jurisdiction of Canada at the date of such first trade;
B. at the date of any distribution under the Current Employee Offering, residents of Canada:
(1) do not own directly or indirectly more than 10% of outstanding Shares; and
(2) did not represent in number more than 10% of the total number of direct or indirect owners of outstanding Shares; and
C. the trade is made:
(1) through a Marketplace outside Canada; and
(2) to a person or company outside Canada; and
D. in Québec, the required fees are paid in accordance with section 271.6(1.1) of the Securities Regulation (Québec); and
(b) for any Subsequent Employee Offerings completed within five years from the date of this decision provided that the representations in paragraphs 8, 9, 11, 12, 13, 14, 15, 16, 17, 18, 19, and 23 through 34 (varied to reflect the identities of particular special-purpose entities) remain true and correct in respect of that Subsequent Employee Offering, and the conditions set out in paragraph (a) above (varied such that any reference therein to the Current Employee Offering is read as a reference to the relevant Subsequent Employee Offering) are satisfied, as of the date of any distribution of a security under such Subsequent Employee Offering.
For the Commission:
"Glenda Campbell, QC"
Vice-Chair
"Stephen Murison"
Vice-Chair