Securities Law & Instruments

Headnote

Dual application for Exemptive Relief -- 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 issuer cannot rely on the employee exemption in section 2.24 of National Instrument 45-106 Prospectus Exemptions as the securities are not being offered to Canadian employees directly by the issuer but rather through a special purpose entity -- Canadian participants will receive disclosure documents -- The special purpose entity is subject to the supervision of the local securities regulator -- Canadian employees will not be induced to participate in the offering by expectation of employment or continued employment -- There is no market for the securities of the issuer in Canada -- The number of Canadian participants and their share ownership are minimal -- Relief granted, subject to conditions.

Applicable Legislative Provisions

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

May 22, 2019

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 ALVEST HOLDING (the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (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 requirement (the Prospectus Relief) so that such requirement does not apply to trades of units "C" (each a Unit "C") and units "D" (each a Unit "D" and, together with units "C", the Units) of a fonds commun de placement d'entreprise or "FCPE", a form of collective shareholding vehicle commonly used in France for the conservation and custodianship of shares held by employee-investors, named "Alvest" (the Fund), such trades made pursuant to an Employee Share Offering (as defined below) to or with Qualifying Employees (as defined below) resident in the Jurisdictions, Alberta and British Columbia (collectively, the Canadian Employees, and Canadian Employees who subscribe for Units, the Canadian Participants); and

2. an exemption from the dealer registration requirement (together with the Prospectus Relief, the Exemption Sought) so that such requirement does not apply to the Filer and its Local Affiliates (as defined below), the Fund and Equalis Capital France (the Management Company) in respect of trades in Units made pursuant to an Employee Share Offering to or with Canadian Employees.

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 (chapter V-1.1, r. 1) (Regulation 11-102) is intended to be relied upon in Alberta and British Columbia; 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 (chapter V-1.1, r. 3) and Regulation 11-102 have the same meaning if used in this decision, unless otherwise defined.

"Affiliate" has the same meaning given to such term in Regulation 45-106 respecting Prospectus Exemptions (chapter V-1.1, r. 21) (Regulation 45-106).

In Québec, "trade" has the same meaning given to such term in Regulation 45-106.

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 securities legislation of any jurisdiction of Canada. The head office of the Filer is located in France. No shares of the Filer (the Shares) are listed on any stock exchange, and the Filer does not intend to list its securities on any stock exchange.

2. The Filer carries on business in Canada through three affiliates that employ Canadian Employees, TLD (Canada) Inc., Sage Parts Canada Inc. and MTI Innovation Masquage Inc. (collectively, the Local Affiliates, and together with the Filer and other affiliates of the Filer, the Alvest Group).

3. Each Local Affiliate is an indirect controlled subsidiary of the Filer and is not, and has no current intention of becoming, a reporting issuer under the securities legislation of any jurisdiction of Canada.

4. The head office of the main Local Affiliate of the Filer, TLD (Canada) Inc., is located in Québec and the greatest number of employees in the Alvest Group in Canada reside in Québec.

5. At the date hereof and taking into account the Employee Share Offering, Canadian Participants do not and will not beneficially own (which term, for the purposes of this paragraph, is deemed to include all Shares held by the Fund on behalf of Canadian Participants) more than 1% of the Shares as shown on the books of the Filer.

6. The Filer has established a global employee share offering (the Employee Share Offering) for Qualifying Employees (as defined below). The Employee Share Offering involves an offering of Shares to be subscribed through the Fund.

7. Only persons who are employees of an entity forming part of the Alvest Group with at least three months' service on the last day of the subscription period and who are still employed on this last day of the subscription period for the Employee Share Offering (the Qualifying Employees) will be allowed to participate in the Employee Share Offering.

8. The Fund was established in 2014 for the purpose of implementing the Employee Share Offering. There is no current intention for the Fund to become a reporting issuer under the securities legislation of any jurisdiction of Canada.

9. The Fund is registered with, and has been approved, by the French Autorité des marchés financiers (the French AMF).

10. Under the Employee Share Offering, Canadian Participants will subscribe for Units and the Fund will then subscribe for Shares on behalf of Canadian Participants using the Canadian Participants' contributions. The subscription period to the Fund will be limited to a single period of two weeks, starting on or around June 10, 2019. The subscription price per Unit will be the Canadian dollar equivalent of 380,2569 [], based itself on a Share price of 1,15 [EURO]. The euro exchange rate used for the subscription will be fixed on May 31, 2019. The Share price has been set by an independent appraiser, Crowe Horwath, (the Independent Appraiser) in accordance with regulations from the French AMF and as described in the terms and rules of the Fund (the Rules).

11. A Canadian Participant's loss, if any, under the Employee Share Offering will be limited to the Canadian Participant's contributions to the Employee Share Offering and under no circumstances will a Canadian Participant be liable to the Filer or the Fund for any additional amounts.

12. The Units will be subject to a hold period of five years (the Lock-Up Period), subject to certain exceptions prescribed by French law and provided for in the Employee Share Offering (such as long-term disability, death, or termination of employment).

13. At the end of the Lock-Up Period, a Canadian Participant may (a) request the redemption of Units in the Fund in consideration for a cash payment equal to the value of the Unit based on the current share price as set by the Independent Appraiser, less a transaction cost of 1% (the Transaction Cost), or (b) continue to hold Units in the Fund and request the redemption of those Units at a later date in consideration for a cash payment equal to the value of the Unit based on the current share price as set by the Independent Appraiser less the Transaction Cost.

14. In the event of an early release resulting from a Canadian Participant exercising one of the exceptions to the Lock-Up Period and meeting the applicable criteria, the Canadian Participant may request the redemption of Units in the Fund in consideration for a cash payment equal to the value of the Unit based on the current share price as set by the Independent Appraiser less the Transaction Cost.

15. Any dividends paid on the Shares held by the Fund will be contributed to the Fund and

(a) either paid in cash to the Unit "D" holder; or

(b) reinvested by the Fund in cash or cash equivalents on behalf of the Unit "C" holder. To reflect this reinvestment, no new Units will be issued. Instead, the reinvestment will increase the asset base of the Unit "C" of the Fund as well as the value of the Units "C" held by the Canadian Participants.

16. In its activities, the Filer agreed to a loan contract. This loan contract does not allow the payment of dividends on the Shares before complete repayment of the loan (i.e. before January 30, 2025) unless such aforesaid payment is authorized prior to this date by a contractual amendment.

17. Under French law, an FCPE is a limited liability entity. The portfolio of the Fund will consist almost entirely of Shares, but may, from time to time, also include cash or cash equivalents in respect of dividends paid on the Shares (as described in paragraph 15). Initially, the portfolio of the Fund will solely consist of Shares.

18. The Management Company is a portfolio management company governed by the laws of France. The Management Company is registered with the French AMF as an investment manager 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 securities legislation of any jurisdiction of Canada.

19. The Management Company's portfolio management activities in connection with the Employee Share Offering and the Fund are limited to subscribing to Shares from the Filer, selling such Shares to the Filer at the Share price set by the Independent Appraiser as necessary in order to fund redemption requests and investing available cash in cash equivalents.

20. The Management Company is also responsible for preparing accounting documents and publishing periodic informational documents about the Fund as provided by the Rules of the Fund.

21. The Management Company is bound to act exclusively in the best interests of Canadian Participants and is liable to them, jointly with the Depositary (as defined below), for any violation of the rules and regulations governing FCPEs, for any self-dealing or for any negligence.

22. The entities forming part of the Alvest Group, the Fund and the Management Company, as well as any director, officer, employee, agent or representative respective thereof will not provide investment advice to the Canadians Employees with respect to an investment in the Shares or the Units nor to the Canadian Participants in respect of the holding or redemption of the Units.

23. Shares issued pursuant to the Employee Share Offering will be deposited in the Fund through Banque Fédérative du Crédit Mutuel (the Depositary), a large French commercial bank subject to French banking legislation. The Depositary carries out orders to purchase, trade and sell securities in the portfolio and takes all necessary action to allow the Fund to exercise the rights relating to the securities held in its portfolio.

24. The accounts of the Fund are audited by chartered auditors, appointed for a period of six years with the agreement of the French AMF.

25. The Unit value of the Fund will be calculated and reported to the French AMF every six months, based on the net assets of the Fund divided by the number of Units outstanding, taking into account the value of Units, when appropriate, in accordance with the Rules of the Funds. The value of the Units will be based on the value of the underlying Shares but the number of Units of the Fund will not correspond to the number of the underlying. The underlying value of the Shares will be re-evaluated once a year based on the formula laid out by the Independent Appraiser in accordance with regulations from the French AMF and as described in the Rules of the Fund.

26. All management charges relating to the Fund will be paid by the Filer, as provided in the Rules of the Fund.

27. 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.

28. The total amount which may be invested by a Canadian Employee in the Employee Share Offering cannot exceed 1 000 €.

29. The Filer adds to the subscriptions made by the Canadian Participants a financial contribution of 100% of the subscriptions up to 500 €.

30. The Units are not transferable and will be not be listed on any exchange, and no market for the Units is expected to develop.

31. The Canadian Employees 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 tax notice, for information purposes only, containing a description of Canadian income tax consequences of subscribing to and holding Units of the Fund and requesting the redemption of such Units for cash at the end of the Lock-Up Period.

32. Canadian Employees can have access, through their management or their human resources services, to a copy of a presentation of the Filer, its annual consolidated financial statements and audited, as well as a copy of the information documents of the Filer deposited with the French AMF relating to the Shares and the Rules of the Fund. The new value of the Shares and general information on the business of the Filer will also be communicated annually to the Canadian Employees.

33. Canadian Participants will receive an initial statement of their holdings under the Employee Share Offering, together with an updated statement at least once per year.

34. There are approximately 286 Qualifying Employees resident in Canada (with the greatest number, approximately 260, resident in Québec), who represent, in the aggregate, approximately 13% of the number of employees in the Alvest Group worldwide.

35. Neither the Fund nor an entity forming part of the Alvest Group is in default of securities legislation of any jurisdiction of Canada. To the Filer's knowledge, the Management Company is not in default of securities legislation of any jurisdiction of Canada.

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 provided that the prospectus requirement will apply to the first trade in any Units acquired by Canadian Participants pursuant to this decision.

"Lucie J. Roy"
Directrice principale du financement des societes