Securities Law & Instruments


Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions – reporting insiders party to automatic securities disposition plan – relief granted from section 3.3 of National Instrument 55-104 Insider Reporting Requirements and Exemptions and subsection 107(2) of the Securities Act (Ontario), provided that the filers remain in compliance with certain representations and that the reporting insiders file an insider report with respect to dispositions under the plan during the year by March 31 of the next calendar year.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 107(2).
National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 3.3.

Order No 2018-SMV-0040

September 14, 2018

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
QUÉBEC AND ONTARIO
(the Jurisdictions)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
PIERRE BEAUDOIN,
ALAIN BELLEMARE,
DANIEL BRENNAN,
FRANÇOIS CAZA,
DAVID COLEAL,
FRED CROMER,
DANIEL DESJARDINS,
JOHN DI BERT,
MICHAEL RYAN,
LAURENT TROGER,
LOUIS VÉRONNEAU AND
JIM VOUNASSIS
(collectively, the Insiders)

AND

BOMBARDIER INC.
(Bombardier and collectively with the Insiders, the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (each a Decision Maker) has received an application (the Application) from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Insiders from the requirement of the Legislation to file an insider report within five days following the acquisition or disposition under the ASDP (as defined below) of the securities subject to the ASDP described herein (the Exemption Sought).

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 Filers provided notice that Subsection 4.7(1) of Regulation 11-102 respecting Passport System (Regulation 11-102) is intended to be relied upon in each of the provinces of Canada other than Ontario; and

c)             the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in Regulation 14-101 respecting Definitions and Regulation 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 Filers:

The Filers

Bombardier

1              Bombardier is a corporation existing under the laws of Canada and is a reporting issuer under the securities legislation of each of the provinces of Canada and is not in default of securities legislation in any jurisdiction.

2              The head office of Bombardier is located in Montréal, Québec.

3              The authorized share capital of Bombardier, as of the date hereof, consists of (i) an unlimited number of preferred shares without nominal or par value issuable in series (the Preferred Shares), of which 12,000,000 have been designated as the Series 2 Preferred Shares, 12,000,000 have been designated as the Series 3 Preferred Shares and 9,400,000 have been designated as the Series 4 Preferred Shares, (ii) 3,592,000,000 Class A shares (multiple voting) (the Class A Shares), and (iii) 3,592,000,000 Class B subordinate voting shares (the Class B Shares). As at the date hereof, Bombardier had outstanding 5,811,736 Series 2 Preferred Shares, 6,188,264 Series 3 Preferred Shares, 9,400,000 Series 4 Preferred Shares, 308,756,749 Class A Shares and 2,110,455,896 Class B Shares.

4              Bombardier’s Class A Shares and Class B Shares (collectively, the Shares), Series 2 Preferred Shares, Series 3 Preferred Shares and Series 4 Preferred Shares are listed for trading on the Toronto Stock Exchange under the symbols “BBD.A”, “BBD.B”, “BBD.PR.B”, “BBD.PR.D” and “BBD.PR.C”, respectively.

5              Bombardier grants awards to certain current or former officers of Bombardier and its subsidiaries (collectively, the Participants and each, a Participant), including the Insiders, from time to time pursuant to Bombardier's incentive plans, which vest according to a fixed schedule and/or the achievement of certain performance targets. These awards include:

(a)           stock options (Options), each Option entitling the holder to purchase one Class B Share;

(b)           restricted share units (RSUs), each RSU representing the right to receive one Class B Share or a cash payment, in accordance with the terms of the RSU plan;

(c)           deferred share units (DSUs), each DSU representing the right to receive one Class B Share or a cash payment, in accordance with the terms of the DSU plan; and

(d)           performance share units (PSUs), each PSU representing the right to receive, if pre-determined performance targets are attained, one Class B Share or a cash payment, with vesting percentages between 0% and up to 150%, in accordance with the terms of the PSU plan (collectively, the Entitlements).

6              Bombardier has established an automatic securities disposition plan dated August 15, 2018 (the ASDP) with Solium Capital Inc. (Solium or the Administrator) in order to facilitate:

a)            the automatic exercise of Entitlements granted to eligible Participants by Bombardier;

b)            the automatic sale of Class B Shares issuable on exercise or settlement, as the case may be, of the Entitlements; and/or

c)             the automatic sale of other Shares; all in accordance with the instructions provided by eligible Participants.

7              Sales of Shares and exercises of Entitlements will be carried out by National Bank Financial Inc. or another registered securities dealer that may be selected by Bombardier for such purposes and which is at arm’s length to Bombardier and each Insider (the Broker).

The Insiders

8              Pierre Beaudoin is Chairman of the Board of Bombardier and is a reporting insider. Pierre Beaudoin is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Pierre Beaudoin beneficially owned, controlled or directed 512,859 Class A Shares (representing approximately 0.163% of the then outstanding Class A Shares), 815,112 Class B Shares (representing approximately 0.039% of the then outstanding Class B Shares), and held 9,801,344 Options, 294,118 RSUs, 1,307,752 PSUs, and 872,896 DSUs.

Pierre Beaudoin holds 2,812,883 Options and 294,118 RSUs, which are subject to the ASDP. Accordingly, Pierre Beaudoin wishes to sell up to 3,107,001 Class B Shares pursuant to the ASDP, resulting from the exercise of 2,812,883 Options and the settlement of 294,118 RSUs.

9              Alain Bellemare is a director and President and Chief Executive Officer of Bombardier and is a reporting insider. Alain Bellemare is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Alain Bellemare beneficially owned, controlled or directed 620,516 Class B Shares (representing approximately 0.029% of the then outstanding Class B Shares), and held 16,502,038 Options, 565,611 RSUs and 4,618,459 PSUs.

Alain Bellemare holds 7,036,430 Options which are subject to the ASDP. Accordingly, Alain Bellemare wishes to sell up to 7,036,430 Class B Shares pursuant to the ASDP, resulting from the exercise of 7,036,430 Options.

10           Daniel Brennan is Senior Vice President, Human Resources of Bombardier and is a reporting insider. Daniel Brennan is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Daniel Brennan beneficially owned, controlled or directed 234,668 Class B Shares (representing approximately 0.011% of the then outstanding Class B Shares), and held 2,504,723 Options and 1,237,896 PSUs.

Daniel Brennan holds 994,845 Options, which are subject to the ASDP. Accordingly, Daniel Brennan wishes to sell up to 994,845 Class B Shares pursuant to the ASDP, resulting from the exercise of 994,845 Options.

11           François Caza is Vice President, Product Development and Chief Engineer, Aerospace of Bombardier and is a reporting insider. François Caza is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, François Caza beneficially owned, controlled or directed 23,845 Class B Shares (representing approximately 0.001% of the then outstanding Class B Shares), and held 2,398,128 Options, 79,186 RSUs, 740,543 PSUs and 19,246 DSUs.

François Caza holds 1,459,050 Options and 253,807 PSUs, which are subject to the ASDP. Accordingly, François Caza wishes to sell up to 1,839,761 Class B Shares pursuant to the ASDP, resulting from the exercise of 1,459,050 Options and the settlement of 253,807 PSUs.

12           David Coleal is President, Business Aircraft of Bombardier and is a reporting insider. David Coleal is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, David Coleal held 9,031,997 Options, 260,181 RSUs and 2,367,649 PSUs.

David Coleal holds 4,223,760 Options, which are subject to the ASDP. Accordingly, David Coleal wishes to sell up to 4,223,760 Class B Shares pursuant to the ASDP, resulting from the exercise of 4,223,760 Options.

13           Fred Cromer is President, Commercial Aircraft of Bombardier and is a reporting insider. Fred Cromer is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Fred Cromer held 8,388,483 Options, 260,181 RSUs and 2,367,649 PSUs.
Fred Cromer holds 3,580,246 Options and 260,181 RSUs, which are subject to the ASDP. Accordingly, Fred Cromer wishes to sell up to 3,840,427 Class B Shares pursuant to the ASDP, resulting from the exercise of 3,580,246 Options and the settlement of 260,181 RSUs.

14           Daniel Desjardins is Senior Vice President, General Counsel and Corporate Secretary of Bombardier and is a reporting insider. Daniel Desjardins is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Daniel Desjardins beneficially owned, controlled or directed 82,380 Class B Shares (representing approximately 0.004% of the then outstanding Class B Shares), and held 4,768,824 Options, 138,575 RSUs, 1,392,253 PSUs and 117,353 DSUs.

Daniel Desjardins holds 2,875,670 Options, 138,575 RSUs, 418,782 PSUs and 117,353 DSUs, which are subject to the ASDP. Accordingly, Daniel Desjardins wishes to sell up to 3,759,771 Class B Shares pursuant to the ASDP, resulting from the exercise of 2,875,670 Options, and the settlement of 138,575 RSUs, 418,782 PSUs and 117,353 DSUs.

15           John Di Bert is Senior Vice President and Chief Financial Officer of Bombardier and is a reporting insider. John Di Bert is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, John Di Bert beneficially owned, controlled or directed 48,687 Class B Shares (representing approximately 0.002% of the then outstanding Class B Shares), and held 9,171,095 Options, 477,817 RSUs and 2,367,649 PSUs.

John Di Bert holds 4,362,858 Options, which are subject to the ASDP. Accordingly, John Di Bert wishes to sell up to 4,362,858 Class B Shares pursuant to the ASDP, resulting from the exercise of 4,362,858 Options.

16           Michael Ryan is President, Aerostructures & Engineering Services of Bombardier and is a reporting insider. Michael Ryan is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Michael Ryan beneficially owned, controlled or directed 75,937 Class B Shares (representing approximately 0.004% of the then outstanding Class B Shares), and held 1,635,542 Options, 67,873 RSUs and 641,309 PSUs.

Michael Ryan holds 696,464 Options, which are subject to the ASDP. Accordingly, Michael Ryan wishes to sell up to 696,464 Class B Shares pursuant to the ASDP, resulting from the exercise of 696,464 Options.

17           Laurent Troger is President, Transportation of Bombardier and is a reporting insider. Laurent Troger is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Laurent Troger beneficially owned, controlled or directed 168,714 Class B Shares (representing approximately 0.008% of the then outstanding Class B Shares), and held 7,297,367 Options, 245,413 RSUs and 2,367,649 PSUs.

Laurent Troger holds 117,973 Class B Shares, 2,419,130 Options and 245,413 RSUs, which are subject to the ASDP. Accordingly, Laurent Troger wishes to sell up to 2,782,516 Class B Shares pursuant to the ASDP, by selling 117,973 Class B Shares and Class B Shares resulting from the exercise of 2,419,130 Options and the settlement of 245,413 RSUs.

18           Louis Véronneau is Senior Vice President, Strategy and Corporate Development of Bombardier and is a reporting insider. Louis Véronneau is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Louis Véronneau held 4,085,329 Options, 158,371 RSUs and 1,375,399 PSUs.

Louis Véronneau holds 2,255,175 Options, 158,371 RSUs and 401,928 PSUs, which are subject to the ASDP. Accordingly, Louis Véronneau wishes to sell up to 3,016,438 Class B Shares pursuant to the ASDP, resulting from the exercise of 2,255,175 Options, and the settlement of 158,371 RSUs and 401,928 PSUs.

19           Jim Vounassis is Chief Operating Officer, Transportation of Bombardier and is a reporting insider. Jim Vounassis is not in default of securities legislation in any jurisdiction in Canada.

As at August 15, 2018, Jim Vounassis beneficially owned, controlled or directed 900 Series 4 Preferred Shares, and held 3,908,929 Options, 79,186 RSUs and 1,258,994 PSUs.

Jim Vounassis holds 400,000 Options, which are subject to the ASDP. Accordingly, Jim Vounassis wishes to sell up to 400,000 Class B Shares pursuant to the ASDP, resulting from the exercise of 400,000 Options.

Automatic Securities Disposition Plan

20           On August 15, 2018, Bombardier published a press release and announced that it has established the ASDP.

21           Each Insider has completed and executed the standard-form ASDP with Bombardier to participate in and become subject to the terms of the ASDP, including making certain representations to both Bombardier and the Administrator.

22           Each Insider has deposited exercise forms with the Administrator containing the Insider’s trading instructions with respect to:

a)            the automatic exercise of Entitlements granted to them by Bombardier;

b)            the automatic sale of Class B Shares issuable on exercise or settlement, as the case may be, of the Entitlements; and/or

c)             the automatic sale of other Shares.

23           An Insider’s trading instructions will remain in effect until the occurrence of an event described in paragraphs 27 hereof.

24           The Broker will exercise Entitlements and make dispositions of Shares in accordance with the trading instructions provided by that Insider to the Administrator.

25           The ASDP includes a waiting period of thirty (30) days between the date of execution of the ASDP and the date that the first exercise or disposition may be made on behalf of an Insider under the ASDP.

26           At the time of execution and participation in the ASDP and the communication of trading instructions to the Administrator, each Insider represented that (a) to the best of his knowledge, there was no blackout period (defined as any time an insider, employee or consultant is restricted by the terms of Bombardier’s insider trading policies or applicable securities law, subject to limited exceptions, from trading in securities of Bombardier) in effect for Bombardier; (b) he was not aware or in possession of an undisclosed material fact or material change about Bombardier or any securities of Bombardier; and (c) he was entering into the ASDP in good faith and not as part of a plan or scheme to evade the insider trading prohibitions under applicable Canadian securities legislation.

27           As regards an Insider, the ASDP will automatically terminate on the earlier of:

a)            the second anniversary of the date of execution of the ASDP;

b)            the date on which all of the applicable Shares and Entitlements have been sold or exercised, as applicable, pursuant to the terms and conditions of the ASDP;

c)             the date the ASDP is voluntarily terminated in accordance with the terms and conditions described in paragraph 28 and 29 hereof;

d)            the date on which Solium receives notice or otherwise becomes aware of

i.              Bombardier having entered into a definitive agreement pursuant to which Bombardier will be subject to a take-over bid, tender or exchange offer with respect to the Shares or Entitlements or an arrangement, merger, acquisition, reorganization, recapitalization or comparable transaction affecting the securities of Bombardier as a result of which the Shares are to be exchanged or converted into shares of another company;

ii.             the death or mental incapacity of the Insider; or

iii.            the commencement or impending commencement of any proceedings in respect of or triggered by the bankruptcy or insolvency of the Insider.

28           Prior to the occurrence of a termination event described in paragraph 27 hereof, the ASDP may be suspended or terminated by Bombardier at any time upon three business days’ prior written notice to Solium and to the public by way of press release. Bombardier cannot amend or modify the ASDP.

Any such suspension or termination shall be made in good faith and not as a part of a plan or scheme to evade the prohibitions of applicable Canadian securities laws.

29           An Insider cannot terminate the ASDP unless all of the following conditions are met:

a)            a blackout period (defined as any time an insider, employee or consultant is restricted by the terms of the Bombardier’s insider trading policies or applicable securities law, subject to limited exceptions, from trading in securities of Bombardier) is not currently in effect for Bombardier;

b)            the Insider has no knowledge of a material fact or material change with respect to Bombardier or any securities of Bombardier that has not been generally disclosed.

c)             any applicable regulatory approval has been obtained;

d)            prior written consent of Solium and Bombardier has been obtained, which shall include a certificate from Bombardier confirming that Bombardier has pre-cleared the termination in accordance with Bombardier’s disclosure policy;

e)            notice to the public by way of a filing on SEDI has been made, including the retrocession of the securities subject to the ASDP in his direct ownership, which shall include a representation that at such time the Insider is not aware of or in possession of an undisclosed material fact or material change about Bombardier or any securities of Bombardier, and, if required or advisable in the opinion of Bombardier in order to ensure compliance with applicable securities laws, by way of a news release, which shall include a representation that at such time the Insider is not aware of or in possession of an undisclosed material fact or material change about Bombardier or any securities of Bombardier;

f)             any such termination shall be made in good faith and not as a part of a plan or scheme to evade the prohibitions of applicable Canadian securities laws.

For the purpose of the Exemption Sought, the Insider has no ability to amend or modify the ASDP or the trading instructions.

The ASDP provides for a 90-day waiting period following voluntary termination by an Insider before such Insider may enroll again in a new automatic securities disposition plan.

30           Neither the Administrator nor the Broker otherwise acts for the Insiders nor, to the Filers’ knowledge, communicates with any other broker involved in a disposition of securities of Bombardier for the Insiders outside of the ASDP, except as may be required under applicable corporate law or securities legislation.

31           Except to set trading instructions in the manner described in paragraph 22, none of the Insiders will have the authority to make investment decisions or influence or control any exercise or disposition effected by the Broker pursuant to the ASDP and neither the Administrator nor the Broker will consult any of the Insiders regarding any exercise or disposition.

32           Other than the agreed upon trading instructions set out in the ASDP, the Insiders will have no authority, influence or control over any sale of Shares or exercise of Entitlements effected by the Broker pursuant to the ASDP, and will not:

a)            attempt to exercise any authority, influence or control over such sales or exercises;

b)            communicate at any time to the Administrator or the Broker any instructions on how to execute any order; or

c)             disclose to the Administrator or the Broker any information concerning Bombardier that may influence the Broker in its execution of any sales or exercises under the ASDP.

33           The ASDP is structured to comply with applicable securities legislation and guidance.

34           The Shares covered by the ASDP are not subject to any liens, security interests or other impediments to transfer (except for limitations imposed by any applicable laws).

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted in respect of each Insider, provided that the Filers comply with the representations in paragraphs 28, 29, 31 and 32 of this decision and that by March 31 of each calendar year, the Insider files a report through SEDI of all acquisitions and dispositions under the ASDP during the prior calendar year not previously disclosed in a SEDI filing, disclosing either of the following:

a)            each acquisition and disposition on a transaction-by-transaction basis;

b)            all acquisitions as a single transaction using the average unit price of the securities, and all dispositions as a single transaction using the average unit price of the securities.

“Gilles Leclerc”
Superintendent, Securities Markets
Autorité des marchés financiers