Securities Law & Instruments

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application for relief from the prospectus and dealer registration requirements for certain trades made in connection with an employee share offering of a French issuer by a selling shareholder -- 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 prospectus exemption in section 2.24 of National Instrument 45-106 Prospectus and Registration Exemptions and the management company cannot rely on the plan administrator exemption in section 8.16 of National Instrument 31-103 Registration Requirements and Exemptions as the shares are not being offered 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 marchés financiers -- Relief granted, subject to conditions.

Applicable Legislative Provisions

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

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

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

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

July 25, 2014

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the "Jurisdiction") AND IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND IN THE MATTER OF SAFRAN S.A. (the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction (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:

(i) units (the "2 Year Principal Classic Units") of an FCPE named "Safran Ouverture" FCPE (the "2 Year Principal Classic FCPE"), which is a fonds commun de placement d'entreprise or "FCPE," a form of collective shareholding vehicle commonly used in France for the conservation of shares held by employee-investors;

(ii) units (together with the 2 Year Principal Classic Units, the "2 Year Units") of a temporary FCPE named "Relais Safran Ouverture 2014" FCPE (the "2 Year Temporary Classic FCPE"), which will merge with the 2 Year Principal Classic FCPE following the Employee Share Offering (as defined below) as further described in paragraph 16 of the Representations;

(iii) units (the "5 Year Principal Classic Units") of the "Safran International Classic" compartment of an FCPE named "Safran International" FCPE (the "5 Year Principal Classic FCPE" and together with the 2 Year Principal Classic FCPE, the "Principal Classic FCPEs" and each a "Principal Classic FCPE"), which is an FCPE; and

(iv) units (together with the 5 Year Principal Classic Units and the 2 Year Units, the "Units") of a temporary FCPE named "Relais Safran International 2014" FCPE (the "5 Year Temporary Classic FCPE" and together with the 2 Year Temporary Classic FCPE, the "Temporary Classic FCPEs" and each a "Temporary Classic FCPE"), which will merge with the 5 Year Principal Classic FCPE following the Employee Share Offering (as defined below) as further described in paragraph 17 of the Representations;

made pursuant to the Employee Share Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdiction and in the Provinces of British Columbia, Alberta, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (collectively, the "Canadian Employees," and Canadian Employees who subscribe for Units, the "Canadian Participants"); and

(b) trades of ordinary shares of the Filer (the "Shares") by the Principal Classic FCPEs and/or the Temporary Classic FCPEs to or with 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 the Safran Group (as defined below and which, for clarity, includes the Filer, and the Local Affiliates (as defined below)), the Selling Shareholder (as defined below), the Temporary Classic FCPEs, the Principal Classic FCPEs and Natixis Asset Management (the "Management Company") in respect of:

(a) trades in Units made pursuant to the Employee Share Offering to or with Canadian Employees; and

(b) trades in Shares by the Temporary Classic FCPEs and/or the Principal Classic FCPEs to or with Canadian Participants upon the redemption of Units as requested by Canadian Participants.

(the Prospectus Relief and the Registration Relief, collectively, the "Offering Relief")

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application),

(a) the Ontario Securities Commission is the principal regulator for this application, and

(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, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning as 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. The head office of the Filer is located in France and the Shares are listed on NYSE Euronext Paris. The Filer is not in default under the Legislation or under the securities legislation of any other jurisdiction of Canada. It is not, and has no current intention of becoming, a reporting issuer under the Legislation or under the securities legislation of any other jurisdiction of Canada.

2. The Filer carries on business through certain affiliated companies that employ Canadian Employees, including Messier-Dowty Inc., Turbomeca Canada Inc., Safran Electronics Canada, SEngS Services Canada Ltd., Morpho Canada Inc., Comnetix Inc. and Morpho Detection Inc. (collectively, the "Local Affiliates," together with the Filer and other affiliates of the Filer, the "Safran Group"). The greatest number of employees of Local Affiliates is employed in Ontario.

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 any other jurisdiction of Canada. None of the Local Affiliates is in default under the Legislation or the securities legislation of any other jurisdiction of Canada.

4. The Republic of France (the "Selling Shareholder") is currently the largest shareholder of the Filer and owns or controls, directly or indirectly, approximately 22% of the Shares and approximately 25% of the voting rights. The Selling Shareholder is not and has no current intention of becoming a reporting issuer (or equivalent) under the Legislation.

5. In March 2013, the Selling Shareholder sold approximately 14.4 million Shares in an institutional offering to institutional investors at a price of €34.50 per Share and in November 2013, the Selling Shareholder sold approximately 21.6 million Shares in an institutional offering to institutional investors at a price of €46.30 per Share (collectively, the "Safran Institutional Transaction"). This sale of Shares by the Selling Shareholder through the Safran Institutional Transaction is considered a disposal which obliges the Selling Shareholder to make an offering of Shares to Qualifying Employees (as defined below) implemented in accordance with a French ministerial order enacted under French privatization law.

6. As of July 21, 2014 and after giving effect to the Employee Share Offering (as defined below), 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 Principal Classic FCPEs and the Temporary Classic FCPEs 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.

7. The Filer has established a global employee offering of Shares by the Selling Shareholder to employees of the Safran Group (the "Employee Share Offering"). The Employee Share Offering involves an offering of Shares to be subscribed through the respective Principal Classic FCPEs via the respective Temporary Classic FCPEs (as further described in paragraphs 16 and 17) (the "Classic Plan").

8. Only persons who are employees of a member of the Safran 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.

9. The Temporary Classic FCPEs have been established for the purpose of implementing the Employee Share Offering. The Principal Classic FCPEs have been established for the purpose of implementing employee share offerings of the Filer. There is no current intention for any of the Principal Classic FCPEs or the Temporary Classic FCPEs to become a reporting issuer under the Legislation or the securities legislation of any other jurisdiction of Canada.

10. Each of the Temporary Classic FCPEs and the Principal Classic FCPEs is an FCPE which is a shareholding vehicle of a type commonly used in France for the conservation or custodianship of shares held by employee-investors. The Principal Classic FCPEs and the Temporary Classic FCPEs have been registered with the French Autorité des marchés financiers (the "French AMF").

11. The Classic Plan includes two options, which we will refer to as the "2 Year Offer" and the "5 Year Offer". Canadian Participants may subscribe under either or both of these options.

12. All Units acquired in the Employee Share Offering by Canadian Participants will be subject to a hold period of several years (the "Lock-Up Period"). Units subscribed for under the 2 Year Offer are subject to a Lock-Up Period of approximately two years. Units subscribed for under the 5 Year Offer are subject to a Lock-Up Period of approximately five years, subject to certain exceptions (only applicable after a period of two years) provided for in the Safran Sharing 2014 Share Offering and prescribed by French law and adopted under the 5 Year Offer in Canada (such as a release on death or termination of employment).

13. Under the 2 Year Offer, Canadian Participants will subscribe for Units in the 2 Year Temporary Classic FCPE, and the 2 Year Temporary Classic FCPE will then subscribe for Shares on behalf of Canadian Participants using the Canadian Participants' contributions. Under the 5 Year Offer, Canadian Participants will subscribe for Units in the 5 Year Temporary Classic FCPE, and the 5 Year Temporary Classic FCPE will then subscribe for Shares on behalf of Canadian Participants using the Canadian Participants' contributions and the employer contributions from Local Affiliates that employ the Canadian Participants, as described in paragraph 14.

14. The Local Affiliate employing a Canadian Participant will also contribute an additional amount on behalf of such Canadian Participant into the Classic Plan if the Canadian Participant is making a contribution toward the 5 Year Offer. For each contribution that a Canadian Participant makes into the 5 Year Offer up to €1,500, the Local Affiliate employing such Canadian Participant will contribute an additional 20% of such amount into the 5 Year Offer on behalf of such Canadian Participant. For the portion of each contribution that a Canadian Participant makes that is equal to or greater than €1,500 and up to and including €5,000, the Local Affiliate employing such Canadian Participant will contribute an additional 10% of such amount into the 5 Year Offer on behalf of such Canadian Participant.

15. For clarity, the maximum amount of matching contribution by a Local Affiliate in respect of a Canadian Participant is €650 (i.e., 20% of the first €1,500 contribution in respect of the 5 Year Offer and 10% of the next €3,500 contribution in respect of the 5 Year Offer).

16. Initially, the Shares subscribed for under the 2 Year Offer will be held in the 2 Year Temporary Classic FCPE and the Canadian Participant will receive Units in the 2 Year Temporary Classic FCPE. Following the completion of the Employee Share Offering, the 2 Year Temporary Classic FCPE will be merged with the 2 Year Principal Classic FCPE (subject to the approval of the supervisory board of the FCPEs and the French AMF). Units of the 2 Year Temporary Classic FCPE held by Canadian Participants will be replaced with Units of the 2 Year Principal Classic FCPE on a pro rata basis and the Shares subscribed for under the Employee Share Offering will be held in the 2 Year Principal Classic FCPE (the "2 Year Merger").

17. Initially, the Shares subscribed for under the 5 Year Offer will be held in the 5 Year Temporary Classic FCPE and the Canadian Participant will receive Units in the 5 Year Temporary Classic FCPE. Following the completion of the Employee Share Offering, the 5 Year Temporary Classic FCPE will be merged with the 5 Year Principal Classic FCPE (subject to the approval of the supervisory board of the FCPEs and the French AMF). Units of the 5 Year Temporary Classic FCPE held by Canadian Participants will be replaced with Units of the 5 Year Principal Classic FCPE on a pro rata basis and the Shares subscribed for under the Employee Share Offering will be held in the 5 Year Principal Classic FCPE (the "5 Year Merger" and together with the 2 Year Merger, the "Mergers").

18. The term "Classic FCPEs" used herein means, prior to the Mergers, the Temporary Classic FCPEs, and following the Mergers, the Principal Classic FCPEs.

19. Under the Classic Plan, at the end of the applicable Lock-Up Period a Canadian Participant may

(a) request the redemption of Units in the Classic FCPEs in consideration for a cash payment equal to the then market value of the Shares, or

(b) continue to hold Units in the Classic FCPEs and request the redemption of those Units at a later date in consideration for a cash payment equal to the then market value of the Shares.

Subject to certain changes in the regulations of the Classic FCPEs which may be made, a Canadian Participant may be permitted to request the redemption of his or her Units in the Classic FCPEs in consideration for the underlying Shares (instead of a cash payment) at or after the end of the Lock-Up Period.

20. In the event of an early unwind resulting from the Canadian Participant exercising one of the exceptions to the Lock-Up Period with respect to the 5 Year Offer and meeting the applicable criteria, a Canadian Participant may request the redemption of Units in the 5 Year Classic FCPE in consideration for a cash payment equal to the then market value of the underlying Shares.

21. Dividends paid on the Shares held in the respective Classic FCPEs will be contributed to the respective Classic FCPEs and used to purchase additional Shares on the NYSE Euronext Paris. To reflect this reinvestment, new Units will be issued with respect to the 5 Year Principal Classic FCPE. With respect to the 2 Year Principal Classic FCPE, the reinvestment will increase the asset base of the Classic FCPEs as well as the value of the Units held by Canadian Participants.

22. The subscription price will be the Canadian dollar equivalent of €41.58, which was a subscription price fixed by a Ministerial Decree dated May 26, 2014. This subscription price of €41.58 has been determined as the weighted average of the two prices at which the Selling Shareholder sold its Shares in 2013 under the Safran Institutional Transaction.

23. Each of the Temporary Classic FCPEs and the Principal Classic FCPEs is an FCPE, which is a limited liability entity under French law. The portfolio of each of the Principal Classic FCPEs and the Temporary Classic FCPEs will consist almost entirely of Shares, but may, from time to time, include cash in respect of dividends paid on the Shares which will be reinvested in Shares and cash or cash equivalents pending investments in Shares and for the purposes of Unit redemptions.

24. 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 investments and complies with the rules of the French AMF. To the best of the Filer's knowledge, the Management Company is not, and has no current intention of becoming, a reporting issuer under the Legislation or the securities legislation of any other jurisdiction of Canada.

25. The Management Company's portfolio management activities in connection with the Employee Share Offering and the Principal Classic FCPEs and the Temporary Classic FCPEs are limited to subscribing for Shares from the Filer, selling such Shares as necessary in order to fund redemption requests and investing available cash in cash equivalents.

26. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents as provided by the rules of each of the Principal Classic FCPEs and the Temporary Classic FCPEs. The Management Company's activities do not affect the underlying value of the Shares and the Management Company will not be involved in providing advice to any Canadian Employees with respect to an investment in the Units. To the best of the Filer's knowledge, the Management Company is not in default of the Legislation or the securities legislation of any other jurisdiction of Canada.

27. Shares issued in the Employee Share Offering will be deposited in the Classic FCPEs through CACEIS Bank France (the "Depositary"), a large French commercial bank subject to French banking legislation.

28. 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 and Finance 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 each of the Principal Classic FCPEs and the Temporary Classic FCPEs to exercise the rights relating to the securities held in its respective portfolio.

29. The Unit value of the respective Classic FCPEs will be calculated and reported to the French AMF on a regular basis, based on the net assets of the respective Classic FCPEs divided by the number of Units outstanding. The value of Classic FCPE Units will increase or decrease reflecting the increase or decrease of the value of the underlying Shares on NYSE Euronext Paris.

30. All management charges relating to the respective Classic FCPEs will be paid from the assets of the respective Classic FCPEs or by the Filer, as provided in the regulations of the Classic FCPEs.

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

32. The total amount that may be invested by a Canadian Employee in the Employee Share Offering with respect to the 5 Year Offer within the framework of the Safran International Group Savings Plan in 2014 cannot exceed 25% of his or her estimated gross annual compensation for the 2014 calendar year. In addition, the total amount that may be invested by a Canadian Employee in the Employee Share Offering with respect to the 5 Year Offer and the 2 Year Offer cannot exceed €187,740 (in accordance with the French law governing this Employee Share Offering). Amounts contributed by a Canadian Employee's employer with respect to the 5 Year Offer through the employer matching contribution described in paragraph 14 are not factored into the maximum amount that a Canadian Employee may contribute.

33. None of the Filer, the Selling Shareholder, the Management Company, the Local Affiliates or any of their directors, officers, employees, agents or representatives will provide investment advice to the Canadian Employees with respect to an investment in the Shares or the Units.

34. The Canadian Employees will receive or may request 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 and a description of Canadian income tax consequences of subscribing for and holding Units of the Classic FCPEs and requesting the redemption of such Units at the end of the applicable Lock-Up Period. These documents will be available in both English and French.

35. Canadian Participants will have access to the Filer's French Document de Référence filed with the French AMF in respect of the Shares and a copy of the rules of the Temporary Classic FCPEs and the Principal Classic FCPEs. 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.

36. Canadian Participants will receive an initial statement of their holdings under the Classic Plan, together with an updated statement at least once per year.

37. There are approximately 1146 Canadian Employees resident in the provinces of Ontario, British Columbia, Alberta, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (with the greatest number, approximately 769 and 348, resident in Ontario and Quebec, respectively). The Canadian Employees represent, in the aggregate, less than 2% of the number of employees in the Safran Group worldwide.

38. The Units will not be listed on any exchange.

Decision

The principal regulator is satisfied that the test contained in the Legislation that provides the principal regulator with the jurisdiction to make the decision has been met.

The decision of the principal regulator 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 Units or 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 first trade is made

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

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

"Mary Condon"
Commissioner
Ontario Securities Commission
 
"Vern Krishna"
Commissioner
Ontario Securities Commission