Securities Law & Instruments

Headnote

Exemptive Relief Applications -- Application for relief from the prospectus and the dealer registration requirements in respect of certain trades made in connection with an employee share offering by a foreign issuer - The offering involves the use of collective employee shareholding vehicles, each a fonds communs de placement d'entreprise (FCPE) - The issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 Prospectus and registration Exemptions as the securities are not being offered to Canadian employees or retired employees directly by the issuer but rather through special purpose entities - Number of Canadian employees is de minimis - Canadian participants will not be induced to participate in the offering by expectation of employment or continued employment - Canadian participants will receive disclosure documents - The special purpose entities are subject to the supervision of the local securities regulator - No market for the securities of the issuer in Canada - Relief granted, subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53 and 74(1).

National Instrument 45-106 Prospectus and Registration Exemptions, ss. 2.24 and 2.28.

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

TRANSLATION

October 13, 2009

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

CAP GEMINI 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:

1. an exemption from the prospectus requirements of the Legislation (the "Prospectus Relief") so that such requirements do not apply to

(a) trades in units of ESOP Leverage NP 2009 (the "Leveraged Compartment"), a compartment of ESOP Capgemini 2009, a fonds communs de placement d'entreprise or "FCPE" which is a form of collective shareholding vehicle of a type commonly used in France for the conservation of shares held by employee-investors, made pursuant to the Employee Share Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdictions and in British Columbia, Alberta and Nova Scotia who elect to participate in the Employee Share Offering (collectively, the "Canadian Participants");

(b) the issuance of units of the Transfer Compartment (as defined below) (units of the Leveraged Compartment and/or units of the Transfer Compartment shall be referred to herein as "Units") to holders of Leveraged Compartment Units upon the transfer of assets of the Leveraged Compartment to the Transfer Compartment at the end of the Lock-Up Period (as defined below) in respect of Canadian Participants that do not request the redemption of their Leveraged Compartment Units at that time;

(c) trades in ordinary shares of the Filer (the "Shares") by the Leveraged Compartment or the Transfer Compartment to Canadian Participants upon the redemption of Units thereof as requested by Canadian Participants;

2. an exemption from the dealer registration requirements of the Legislation (the "Registration Relief") so that such requirements do not apply to

(a) trades in Units of the Leveraged Compartment made pursuant to the Employee Share Offering to or with Canadian Participants not resident in Ontario;

(b) the issuance of Units of the Transfer Compartment to holders of Leveraged Compartment Units upon the transfer of assets of the Leveraged Compartment to the Transfer Compartment at the end of the Lock-Up Period in respect of Canadian Participants that do not request the redemption of their Leveraged Compartment Units at that time; and

(c) trades in Shares by the Leveraged Compartment or the Transfer Compartment to Canadian Participants upon the redemption of Units thereof as requested by Canadian Participants.

3. an exemption from the adviser registration requirements and dealer registration requirements of the Legislation so that such requirements do not apply to the manager of the Leveraged Compartment and Transfer Compartment, Crédit Agricole Asset Management (the "Management Company"), to the extent that its activities described in paragraphs 33 and 34 of the Representations are subject to the adviser registration requirements and dealer registration requirements of the Legislation (such exemption being hereinafter referred to, collectively with the Prospectus Relief and the Registration Relief, as the "Offering Relief"); and

4. an exemption from the dealer registration requirements of the Legislation so that such requirements do not apply to the first trade in any Shares acquired by Canadian Participants pursuant to 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 Regulation 11-102 respecting Passport System ("Regulation 11-102") is intended to be relied upon in British Columbia, Alberta and Nova Scotia, 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, Regulation 45-102 respecting Resale of Securities, Regulation 45-106 respecting Prospectus and Registration Exemptions 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 formed under the laws of France. It is not, and has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of British Columbia, Alberta and Nova Scotia. The head office of the Filer is located in France.

2. The Filer carries on business in Canada through the following affiliated companies: Capgemini Canada Inc., New Horizon System Solutions LP, Inergi LP, Capgemini US LLC and Capgemini Applications Services, LLC (collectively, the "Local Affiliates" and, together with the Filer and other affiliates of the Filer, the "Capgemini Group"). Capgemini Canada Inc. is a corporation organized under the laws of the Province of New Brunswick and New Horizon System Solutions LP and Inergi LP are limited liability partnerships organized under the laws of the Province of Ontario. Capgemini US LLC and Capgemini Applications Services, LLC are U.S. limited liability companies that do business in Canada and employ Qualifying Employees resident in Canada.

3. Each of the Local 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 Legislation or under the securities legislation of British Columbia, Alberta and Nova Scotia. The head office of the Capgemini Group in Canada is located in Toronto, Ontario, and the greatest number of employees of Local Affiliates is employed in Ontario.

4. 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 Leveraged Compartment 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 Shares as shown on the books of the Filer.

5. The Filer has established a global employee share offering for employees of the Capgemini Group (the "Employee Share Offering"). The Employee Share Offering is comprised of one subscription option which is an offering of Shares to be subscribed through the Leveraged Compartment (the "Leveraged Plan").

6. Only persons who are employees of a member of the Capgemini 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.

7. The Leveraged Compartment is established for the purpose of implementing the Employee Share Offering. There is no current intention for the Leveraged Compartment to become a reporting issuer under the Legislation or under the securities legislation of British Columbia, Alberta and Nova Scotia.

8. The Leveraged Compartment will be registered with, and approved by, the Autorité des marchés financiers in France (the "French AMF") prior to the commencement of the employee subscription/reservation period in respect of the Employee Share Offering. Only Qualifying Employees will be allowed to hold Units of the Leveraged Compartment.

9. All Units acquired under the Leveraged Plan 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, disability or termination of employment).

10. Under the Leveraged Plan, Canadian Participants will subscribe for Units in the Leveraged Compartment, and the Leveraged Compartment will then subscribe for Shares using the Employee Contribution (as described below) and certain financing made available by Société Générale (the "Bank"), which bank is governed by the laws of France.

11. The Leveraged Compartment 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 Share price on the 20 trading days preceding the date of fixing of the subscription price by the Board of Directors of the Filer (the "Reference Price"), less a 15% discount.

12. Canadian Participants will contribute 10% of the price of each Share, expressed in Euros, to be subscribed for by the Leveraged Compartment (such Euro amount is referred to herein as the "Employee Contribution"). The Leveraged Compartment will enter into a swap agreement (the "Swap Agreement") with the Bank. Under the terms of the Swap Agreement, the Bank will contribute the remaining 90% of the price of each Share to be subscribed for by the Leveraged Compartment (the "Bank Contribution").

13. Under the Leveraged Plan, a Canadian Participant effectively receives a share appreciation potential entitlement in the increase in value, if any, of the Shares subscribed on behalf of such Canadian Participant measured over the Lock-up Period, including with respect to the Shares financed by the Bank Contribution.

14. Under the terms of the Swap Agreement, at the end of the Lock-Up Period, the Leveraged Compartment will owe to the Bank an amount equal to A -- [B+C], where:

(a) "A" is the market value of all the Shares at the end of the Lock-Up Period that are held in the Leveraged Compartment (as determined pursuant to the terms of the Swap Agreement),

(b) "B" is the aggregate amount of all Employee Contributions,

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

(X) 0.807 multiplied by the quotient obtained from dividing (I) with (II) and further multiplied by the difference between (II) and (I), where

(I) is the Reference Price, and

(II) is the average price of the Shares based on the last closing price of the Shares on the last trading day of each month over the duration of the Lock-up Period (There will be a total of 60 readings and in the event that a reading of a Share price is less than the Reference Price, the Reference Price will be used for such reading),

and further multiplied by

(Y) the number of Shares held in the Leveraged Compartment.

15. If, at the end of the Lock-Up Period, the market value of the Shares held in the Leveraged Compartment is less than 100% of the Employee Contributions, the Bank will, pursuant to a guarantee contained in the Swap Agreement, make a cash contribution to the Leveraged Compartment to make up such shortfall.

16. At the end of the Lock-Up Period, a Canadian Participant may elect to have his or her Leveraged Compartment Units redeemed in consideration for cash or Shares equivalent to

(a) a Canadian Participant's Employee Contribution, and

(b) the Canadian Participant's portion of the Appreciation Amount, if any.

17. If a Canadian Participant does not request the redemption of his or her Units in the Leveraged Compartment at the end of the Lock-Up Period, his or her investment in the Leveraged Compartment will be transferred to another FCPE or a compartment of an FCPE established under the Capgemini Group's employee shareholding plan (the "Transfer Compartment"). The characteristics of the Transfer Compartment are further described in Representations 22 to 26 below.

18. New Units of the Transfer Compartment will be issued to the applicable Canadian Participants in recognition of the assets transferred to the Transfer Compartment. Canadian Participants will be entitled to request the redemption of the new Units whenever they wish. However, following a transfer to the Transfer Compartment, the Employee Contribution and the Appreciation Amount will not be covered by the Swap Agreement nor the Bank guarantee contained therein.

19. At the end of the Lock-Up Period or in the event of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period, a Canadian Participant will, pursuant to the guarantee contained in the Swap Agreement, be entitled to receive at least 100% of his or her Employee Contribution.

20. The Management Company is permitted to cancel the Swap Agreement (which will have the effect of cancelling the guarantee) in certain strictly defined conditions where it is in the best interests of the holders of Units of the Leveraged Compartment. The Management Company is required under French law to act in the best interests of the holders of the Units of the Leveraged Compartment. In the event that the Management Company cancels the Swap Agreement and such cancellation is determined not to be in the best interests of the holders of the Units of the Leveraged Compartment, then such holders would have a right of action under French law against the Management Company.

21. Under no circumstances will a Canadian Participant in the Leveraged Plan be liable to any of the Leveraged Compartment, the Bank or the Filer for any amounts in excess of his or her Employee Contribution under the Leveraged Plan.

22. The Transfer Compartment will either be (i) a compartment of the ESOP Capgemini 2009 FCPE, (ii) a compartment of another FCPE or (iii) an FCPE. In either case, the Transfer Compartment will be a traditional "classic-style" shareholding vehicle of a type commonly used in France and substantially similar to other "classic-style" shareholding vehicles established by other French issuers for their global employee share offerings of which exemptive relief has been previously granted on several occasions by Canadian securities regulators.

23. The Transfer Compartment will be created and established by the Management Company and the Filer prior to the end of the Lock-Up Period (likely a few weeks prior to the end of the Lock-Up Period). The Transfer Compartment will be registered with and approved by the French AMF prior to the end of the Lock-Up Period.

24. A Canadian Participant's investment in the Leveraged Compartment will only be transfered to the Transfer Compartment if such Canadian Participant elects not to request the redemption of his or her Units in the Leveraged Compartment at the end of the Lock-Up Period. A Canadian Participant will be able to request the redemption of his or her Units in the Transfer Compartment at any time in consideration for the underlying Shares or a cash payment equal to the then market value of the Shares held by the Transfer Compartment.

25. Any dividends paid on the Shares held in the Transfer Compartment will be contributed to the Transfer Compartment and used to purchase additional Shares. To reflect this reinvestment, either new Units of the Transfer Compartment (or fractions thereof) will be issued to Canadian Participants, or no additional Units of the Transfer Compartment will be issued and the net asset value of the Transfer Compartment will be increased.

26. The Leveraged Compartment's portfolio will almost entirely consist of Shares, but it will also include the Swap Agreement. From time to time, the Leveraged Compartment's portfolio may include cash or cash equivalents that the Leveraged Compartment may hold pending investments in Shares and for the purpose of Unit redemptions. The Transfer Compartment's portfolio will almost entirely consist of Shares. The Transfer Compartment's portfolio 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, as well as cash or cash equivalents pending investments in the Shares and for the purposes of Unit redemptions.

27. During the term of the Swap Agreement, an amount equal to the net amounts of any dividends paid on the Shares held in the Leveraged Compartment will be remitted by the Leveraged Compartment to the Bank as partial consideration for the obligations assumed by the Bank under the Swap Agreement.

28. For Canadian federal income tax purposes, the Canadian Participants in the Leveraged Plan should be deemed to receive all dividends paid on the Shares financed by either the Employee Contribution or the Bank Contribution at the time such dividends are paid to the Leveraged Compartment, notwithstanding the actual non-receipt of the dividends by the Canadian Participants by virtue of the terms of the Swap Agreement.

29. The declaration of dividends on the Shares (in the ordinary course or otherwise) is strictly determined by the board of directors of the Filer and approved 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.

30. To respond to the fact that, at the time of the initial investment decision relating to participation in the Leveraged Plan, Canadian Participants will be unable to quantify their potential income tax liability resulting from such participation, the Filer will indemnify each Canadian Participant in the Leveraged Plan for all tax costs to the Canadian Participants associated with the payment of dividends in excess of a specified amount of Euros per calendar year per Share during the Lock-Up Period such that, in all cases, a Canadian Participant will, at the time of the original investment decision, be able to determine his or her maximum tax liability in connection with dividends received by the Leveraged Compartment on his or her behalf under the Leveraged Plan.

31. At the time the Leveraged Compartment's obligations under the Swap Agreement are settled, the Canadian Participant should realize a capital gain (or capital loss) by virtue of having participated in the Swap Agreement to the extent that amounts received by the Leveraged Compartment, on behalf of the Canadian Participant, from the Bank exceed (or are less than) amounts paid by the Leveraged Compartment, on behalf of the Canadian Participant to the Bank. Any dividend amounts paid to the Bank under the Swap Agreement will serve to reduce the amount of any capital gain (or increase the amount of any capital loss) that the Canadian Participant would have realized 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).

32. 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 and complies with the rules of the French AMF. The Management Company is not, and has no current intention of becoming, a reporting issuer under the Legislation or the securities legislation of British Columbia, Alberta and Nova Scotia.

33. The Management Company's portfolio management activities in connection with the Employee Share Offering, the Leveraged Compartment and the Transfer Compartment are limited to subscribing for Shares from the Filer, selling such Shares as necessary in order to fund redemption requests, and such activities as may be necessary to give effect to the Swap Agreement.

34. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents. The Management Company's activities in no way affect the underlying value of the Shares.

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

36. Shares issued under the Employee Share Offering will be deposited in the Leveraged Compartment's accounts with Caceis Bank (the "Depositary"), a large French commercial bank subject to French banking legislation.

37. Under French law, the Depositary must be selected by the Management Company from among a limited number of companies identified on a list maintained 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 Shares and takes all necessary action to allow the Leveraged Compartment to exercise the rights relating to the Shares held in its portfolio.

38. 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.

39. The total amount invested by a Canadian Participant in the Employee Share Offering cannot exceed 2.5% of his or her estimated gross annual compensation for the 2009 calendar year.

40. The Shares are listed on Euronext Paris. 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, any first trades in Shares by Canadian Participants will be effected through the facilities of, and in accordance with, the rules and regulations of Euronext Paris.

41. The Filer will retain a securities dealer registered as a broker/investment dealer (the "Registrant") under the securities legislation of Ontario to provide advisory services to Canadian Participants resident in Ontario who express interest in the Leveraged Plan and to make a determination, in accordance with industry practices, as to whether an investment in the Leveraged Plan is suitable for each such Canadian Participant based on his or her particular financial circumstances. The Registrant will establish accounts for, and will receive the initial account statements from the Leveraged Compartment on behalf of such Canadian Participants. The Units of the Leveraged Compartment will be issued by the Leveraged Compartment to Canadian Participants resident in Ontario solely through the Registrant.

42. Units of the Leveraged Compartment will be evidenced by account statements issued by the Leveraged Compartment.

43. The 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 Employee Share Offering, a tax notice containing a description of Canadian income tax considerations of subscribing to and holding Units in the Leveraged Compartment and redeeming Units for cash or Shares at the end of the Lock-Up Period. The information package for Canadian Participants in the Leveraged Plan will include all the necessary information for general inquiry and support with respect to the Leveraged Plan and will also include a risk statement which will describe certain risks associated with an investment in Units pursuant to the Leveraged Plan, and a tax calculation document which will illustrate the general Canadian federal income tax considerations relating to the participation in the Leveraged Plan.

44. Upon request, Canadian Participants may receive copies of the Filer's Document de Référence filed with the French AMF in respect of the Shares and a copy of the Leveraged Compartment's rules (which are analogous to company by-laws). Canadian Participants will also have access to copies of the continuous disclosure materials relating to the Filer that are furnished to its shareholders generally.

45. There are approximately 1196 Qualifying Employees resident in Canada, with the largest number of Qualifying Employees in the Province of Ontario (1155) and the second largest number of Qualifying Employees in Québec (35). Qualifying Employees are also located in British Columbia, Alberta and Nova Scotia. The Qualifying Employees resident in Canada represent in the aggregate approximately 1.6% of the number of Qualifying Employees of the Capgemini Group.

46. The Filer is not, and none of the Local Affiliates are, in default of the securities legislation of Canada. To the best of the Filer's knowledge, the Management Company is not in default of the securities legislation of Canada.

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 Offering Relief is granted provided that the prospectus requirements of the Legislation will apply to the first trade in any Shares 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 trade is made

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

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

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 (a), (b) and (c) above under the decision granting the Offering Relief are satisfied.

Jean Daigle
Director, Corporate Finance
Autorité des marches financiers
 
Claude Lessard
Manager, Supervision of Intermediaries
Autorité des marchés financiers