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 share offering by a French issuer -- The offering involves the use of collective employee shareholding vehicles, each a fonds communs de placement d'entreprise (FCPE) -- The Filer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 Prospectus and Registration Exemptions as the shares are not being offering to Canadian employees directly by the issuer but through the FCPEs -- Canadian employees will receive disclosure documents -- The FCPEs are subject to the supervision of the French Autorité des marches financiers -- Relief granted, subject to conditions.

Applicable Legislative Provisions

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

National Instrument 45-106 Prospectus and Registration Exemptions, s. 2.24.

National Instrument 45-102 Resale of Securities, s. 2.14.

February 6, 2009

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

ALSTOM (the "Filer")

 

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Makers") 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 requirements of the Legislation{1} (the "Prospectus Relief") and the dealer registration requirements of the Legislation{2} (the "Registration Relief") so that such requirements do not apply to:

(a) trades in units ("Units") of

(i) ALSTOM Sharing Classic (the "Principal Classic Compartment"), a compartment of ALSTOM FCPE (the "Fund", which is a fonds communs de placement d'entreprise or "FCPE"); and

(ii) ALSTOM Relais 2009 FCPE (the "Temporary Fund", and together with the Principal Classic Compartment, the "Compartments") made pursuant to the global employee share offering of the Filer (the "Employee Share Offering") to or with Qualifying Employees (as defined below) resident in the Jurisdictions who elect to participate in the Employee Share Offering (the "Canadian Participants");

(b) trades of ordinary shares of the Filer (the "Shares") by the Compartments to Canadian Participants upon the redemption of Units by Canadian Participants;

2. an exemption from the adviser registration requirements and dealer registration requirements of the Legislation{3} so that such requirements do not apply to the manager of the Funds, BNP Paribas Asset Management SAS (the "Management Company"), to the extent that its activities described in paragraphs 17 and 18 of the Representations require compliance with the adviser registration requirements and dealer registration requirements (collectively, with the Prospectus Relief and the Registration Relief, the "Initial Requested Relief"); and

3. an exemption from the dealer registration requirements of the Legislation{4} so that such requirements do not apply to the first trade in any Units or Shares acquired by Canadian Participants under the Employee Share Offering (the "First Trade Relief").

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 British Columbia, Alberta, New Brunswick, Nova Scotia and Newfoundland and Labrador (the "Additional Alstom 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 National Instrument 14-101 Definitions and Ml 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 formed under the laws of France.

2. The Shares are listed on Eurolist by Euronext Paris and are subject to the rules and regulations of such foreign exchange. The head office of the Filer is located in Levallois Perret, France.

3. The Filer is a reporting issuer under the Legislation and has continuous disclosure obligations in all Jurisdictions, the Additional Alstom Jurisdictions and in Saskatchewan, Manitoba and Prince Edward Island (together with the Jurisdictions and the Additional Alstom Jurisdictions, the "Reporting Jurisdictions"). The Filer has no current intention of becoming a reporting issuer in any other Canadian jurisdiction in which it is not currently a reporting issuer.

4. The Filer is a designated foreign issuer within the meaning of National Instrument 71-102 -- Continuous Disclosure and Other Exemptions Relating to Foreign Issuers ("NI 71-102") and is subject to the foreign regulatory requirements of the French Autorité des marchés financiers. Pursuant to NI 71-102, the Filer satisfies its Canadian continuous disclosure requirements by filing the disclosure documents it is required to file under securities laws in France with the applicable Canadian securities regulatory authorities.

5. To the Filer's knowledge, it is not in default of the securities legislation of the Reporting Jurisdictions.

6. The Filer carries on business in Canada through the following affiliated companies: ALSTOM Canada Inc., ALSTOM Hydro Canada Inc., ALSTOM Transportation Information and Security Inc. and General Railway Signal of Canada Ltd. (collectively, the "Canadian Affiliates," together with the Filer and other affiliates of the Filer, the "ALSTOM Group"). Each of the Canadian Affiliates is a directly or indirectly controlled subsidiary of the Filer and is not, and has no current intention of becoming, a reporting issuer under the Legislation. The Canadian Affiliates are not in default of the Legislation.

7. The head office of the Alstom Group in Canada is located in Montréal, Québec, and the greatest number of employees of Canadian Affiliates are employed in Québec.

8. As of the date hereof and after giving effect to the Employee Share 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 Compartments on behalf of Canadian Participants) 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.

9. Only persons who are employees of a member of the ALSTOM Group during the subscription period for the Employee Share Offering and who meet other employment criteria (the "Qualifying Employees") will be allowed to participate in the Employee Share Offering.

10. As set forth above, the Temporary Fund is and the Principal Classic Compartment is a compartment of a FCPE, which is a shareholding vehicle of a type commonly used in France for the conservation or custodianship of shares held by employee investors, which must be registered with and approved by the Autorité des marchés financiers in France (the "French AMF") at the time of its creation. The Compartments are established for the purpose of implementing the Employee Share Offering. There is no current intention for the Compartments to become reporting issuers under the Legislation. Only Qualifying Employees will be allowed to purchase Units of the Compartments and such holdings will be in an amount reflecting the number of Shares held by the Compartments on their behalf.

11. Qualifying Employees will be invited to participate in the Employee Share Offering under the terms of two subscription options: the Classic Plan (the "Classic Plan") and the Two For One Plan (the "Free Share Plan").

12. Under the Classic Plan:

(a) The Temporary Fund will subscribe for Shares on behalf of the Canadian Participants at a subscription price that is equal to the price calculated as the average of the opening price of the Shares on the 20 trading days preceding the date of the fixing of the subscription price by the Filer's Chief Executive Officer (the "Chief Executive Officer") acting upon delegation of authority of the Board of Directors of the Filer (the "Reference Price"), less a 20% discount (the "Subscription Price").

(b) The Shares will be held in the Temporary Fund and the Canadian Participant will receive Units in the Temporary Fund.

(c) After completion of the Employee Share Offering, the Temporary Fund will be merged with the Principal Classic Compartment (subject to the French AMF's approval). Units of the Temporary Fund held by Canadian Participants will be replaced with Units of the Principal Classic Compartment on a pro rata basis and the Shares subscribed for under the Classic Plan will be held in the Principal Classic Compartment (the "Merger"). The term "Classic Compartment" used herein means, prior to the Merger, the Temporary Fund, and following the Merger, the Principal Classic Compartment.

(d) The Units will be subject to a hold period of approximately five years (the "Lock-Up Period"), subject to certain exceptions prescribed by French law (such as a release on death or termination of employment).

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

(i) redeem his or her Units under the Classic Plan in consideration for the underlying Shares or a cash payment equal to the then market value of such Shares, or

(ii) continue to hold his or her Units and redeem those Units at a later date.

(f) In the event of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period prescribed by French law and meeting the applicable criteria, a Canadian Participant may redeem Units in consideration for a cash payment equal to the then market value of such Shares.

13. Under the Free Share Plan:

(a) A Canadian Participant may choose to subscribe for Shares in an amount corresponding to a multiple of 1, 4, 8, 12, 16 or 20 times the Reference Price (such investment amount, the "Personal Contribution").

(b) The Temporary Fund will use the Personal Contribution to subscribe for Shares on behalf of the Canadian Participants at the Subscription Price. Because the Subscription Price reflects a 20% discount on the Reference Price, while the Personal Contribution reflects the Reference Price with no discount, the number of Shares which will be initially contributed to the Classic Compartment under the Free Share Plan will be greater than the multiple corresponding to the Canadian Participant's Personal Contribution.

(c) The Shares will be held in the Temporary Fund and the Canadian Participant will receive Units in the Temporary Fund. After the Merger, the Units in the Temporary Fund will be replaced with Units of the Principal Classic Compartment on a pro rata basis and will continue to be subject to the Lock-Up Period.

(d) The Filer will grant to the Canadian Participant the right to receive Shares for free ("Free Shares") at the end of the Lock-Up Period, if the Canadian Participant has satisfied the continued employment condition set by the Filer (with certain exceptions such as death, retirement, disability or, subject to approval of the Chief Executive Officer, change of control, sale of business or negotiated termination process). The total number of Shares to which the Canadian Participant would be entitled at the end of the Lock-Up Period (including Shares subscribed with the Personal Contribution and, subject to the employment condition, the Free Shares) will be two times the multiple corresponding to the Canadian Participant's Personal Contribution. The number of Free Shares granted to the Canadian Participant will be the difference between the total number of Shares to which the Canadian Participant would be entitled at the end of the Lock-Up Period and the number of Shares subscribed at the Subscription Price with the Canadian Participant's Personal Contribution.

(e) To reduce negative consequences in the event of a decline in the price of Shares, the employer of the Canadian Participant (the "Employer") will provide an indemnity ("Indemnity") to the Canadian Participant via the grant of a stock protection right with respect to each Share financed by the Canadian Participant's Personal Contribution and each Free Share granted by ALSTOM to the Canadian Participant. The effect of this Indemnity is that the Canadian Participant is entitled to an indemnity payment by the Employer corresponding to an amount equal to the difference (provided such difference is negative) between (i) the total value of the Shares (including Free Shares) in Euros received by the Canadian Participant at the end of the Lock-Up Period, and (ii) the Canadian Participant's Personal Contribution in Euros. The application of the Indemnity is subject to certain exceptions and special terms, and in such situations, the calculations used to determine the Indemnity may result in a partial instead of full indemnity for the Personal Contribution.

(f) At the end of the Lock-Up Period, a Canadian Participant will be entitled to:

(i) the Units subscribed for under the Free Share Plan, which the participant may (A) redeem in consideration for the underlying Shares or a cash payment equal to the then market value of such Shares, or (B) continue to hold and redeem at a later date,

(ii) the Free Shares granted to the Canadian Participant by the Filer, subject to the continued employment condition, and

(iii) a payment under the Indemnity, if applicable.

(g) In the event of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period prescribed by French law and meeting the applicable criteria, a Canadian Participant may redeem Units in consideration for a cash payment equal to the then market value of such Shares. Such participant may remain entitled to the Free Shares to be delivered after the end of the Lock-Up Period, subject to the continued employment condition, and a payment under the Indemnity.

14. Any dividends paid on the Shares held in the Classic Compartment will be contributed to the Classic Compartment and used to purchase additional Shares. To reflect this reinvestment, new Units (or fractions thereof) will be issued. For greater clarity, as the Free Shares will not be delivered until the end of the Lock-Up Period, no dividends will be distributed with respect to the Free Shares during the Lock-Up Period.

15. The Classic Compartment's portfolio will consist almost entirely of Shares of the Filer, but may also consist, from time to time, of cash in respect of dividends paid on the Shares which will be reinvested in Shares as discussed above. The Classic Compartment's portfolio may also include cash or cash equivalents pending investments in the Shares and for the purposes of Unit redemptions.

16. The Management Company is a portfolio management company governed by the laws of France. The Management Company is registered with the French AMF to manage French investment funds. The Management Company is not a reporting issuer under the Legislation.

17. The Management Company's portfolio management activities in connection with the Employee Share Offering and the Classic Compartment is limited to subscribing for Shares from the Filer on behalf of the Canadian Participants and selling such Shares as necessary in order to fund redemption requests.

18. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of the Compartments. The Management Company's activities in no way affect the underlying value of the Shares and the Management Company will not be involved in providing advice to any Canadian Participants.

19. Shares issued in the Employee Share Offering will be deposited in the Temporary Fund through BNP Paribas Securities Services (the "Depositary"), a large French commercial bank subject to French banking legislation.

20. Under French law, the Depositary must be selected by the Management Company from among a limited number of companies identified on a list by the French Minister of the Economy, Finance and Industry and its appointment must be approved by the French AMF. The Depositary carries out orders to purchase, trade and sell securities in the portfolio and takes all necessary action to allow the Classic Compartment to exercise the rights relating to the securities held in its portfolio.

21. Participation in the Employee Share Offering is voluntary, and the Canadian resident Qualifying Employees will not be induced to participate in the Employee Share Offering by expectation of employment or continued employment.

22. The total amount invested by a Canadian Participant in the Employee Share Offering cannot exceed 25% of his or her gross annual remuneration for the 2008 calendar year.

23. None of the Filer, the Management Company, the Canadian Affiliates or any of their employees, agents or representatives will provide investment advice to the Canadian Participants with respect to an investment in the Shares or the Units.

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

25. Canadian Participants will be provided with a summary of the terms of the Employee Share Offering and the information notices for the Temporary Fund, the Principal Classic Compartment and the stock protection right (which provides the Indemnity), as applicable. Canadian Participants will also receive a tax notice relating to the Classic Compartment containing a description of Canadian income tax consequences of subscribing to and holding the Units in the Classic Compartment and redeeming Units for cash or Shares at the end of the Lock-Up Period as well as a description of the tax consequences relating to the Free Shares and payments under the Indemnity. This information will be provided in the French or English language, as applicable.

26. Upon request, Canadian Participants may receive copies of the Filer's annual report and/or the French Document de Référence filed with the French AMF and a copy of the Classic Compartment's rules (which are analogous to company by-laws). The Canadian Participants will also have access to copies of the continuous disclosure materials relating to the Filer that are furnished to holders of Shares generally.

27. Canadian Participants will receive an initial statement of their holdings under the Classic Plan and Free Share Plan, as well as periodic statements.

28. There are approximately 981 Qualifying Employees resident in Canada, with the largest number of Qualifying Employees in the Province of Québec (719) and the second largest in Ontario (120). Employees are also located in British Columbia, Alberta, New Brunswick, Nova Scotia, and Newfoundland and Labrador. The Qualifying Employees represent in the aggregate less than 1.5% of the number of employees in the ALSTOM Group worldwide.

29. The Filer is not, and none of the Canadian Affiliates are, in default under the Legislation.

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 Initial Requested Relief is granted provided that

1. the first trade in any Units or Shares acquired by Canadian Participants pursuant to this Decision in a Jurisdiction is deemed a distribution or a primary distribution to the public under the Legislation of such Jurisdiction unless the following conditions are met:

(a) the Compartments

(i) were not reporting issuers in any jurisdiction of Canada at the distribution date, or

(ii) are not reporting issuers 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 trade is made

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

(ii) to a person or company outside of Canada;

2. in Québec, the required fees are paid in accordance with Section 271.6(1.1) of the Securities Regulation (Québec); and

It is further the decision of the Decision Makers under the Legislation that the First Trade Relief is granted provided that the conditions set out in paragraphs 1(a), 1(b) and 1(c) under this decision granting the Initial Requested Relief are satisfied.

"Josée Deslauriers"
Director, Corporate Finance
Autorité des marchés financiers
 
"Mario Albert"
Superintendent, Distribution
Autorité des marchés financiers

{1} Section 53 of the Securities Act (Ontario) (the "OSA") and sections 11 and 12 of the Securities Act (Québec) (the "QSA").

{2} Section 25(1)(a) of the OSA and sections 148 and 149 of the QSA.

{3} Section 25(1)(a) and (c) of the OSA and sections 148 and 149 of the QSA.

{4} Section 25(1)(a) of the OSA and sections 148 and 149 of the QSA.