IN THE MATTER OF THE SECURITIES LEGISLATION
OF BRITISH COLUMBIA,
ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, Québec, NEW BRUNSWICK, NOVA SCOTIA
AND
NEWFOUNDLAND AND LABRADOR
AND
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF AVENTIS S.A.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision
Maker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,
Québec, New Brunswick, Nova Scotia and Newfoundland and Labrador, (collectively, the
"Jurisdictions") has received an application from Aventis S.A. (the
"Filer") for a decision under the securities legislation (the
"Legislation") of the Jurisdictions that:
(i) the prospectus requirements contained in the Legislation shall not apply
to trades in
units (the "Units") of two French employee savings funds (fonds communs de
placement d'entreprise or "FCPEs"), the Aventis Shares Fund (the "Classic
Fund") and the Aventis Performance 2003 Fund (the "Leveraged Fund" and,
together with the Classic Fund, the "Funds") made pursuant to the Employee Share
Offering (as defined below) to or with Qualifying Employees (as defined below) resident in
the Jurisdictions who elect to participate (the "Canadian Participants")
in the
Employee Share Offering;
(ii) the registration requirements contained in the Legislation shall not apply to trades
in Units of the Classic Fund to or with Canadian Participants, nor to trades in Units of
the Leveraged Fund to or with Canadian Participants not resident in Ontario or Manitoba;
(iii) the registration and prospectus requirements shall not apply to the trades
of
ordinary shares of the Filer (the "Shares") by the Funds to Canadian
Participants upon the redemption of Units by Canadian Participants, nor to the
issuance of Units of the Classic Fund to holders of Leveraged Fund Units upon
the transfer of the
assets of the Leveraged Fund to the Classic Fund at the end of the Hold Period
(as defined
below);
(iv) the registration and prospectus requirements shall not apply to the first trade in
Shares acquired by Canadian Participants under the Employee Share Offering, where such
trade is made through the facilities of a stock exchange outside of Canada; and
(v) Natexis Epargne Enterprise, the manager of the Funds (the "Manager")
shall be exempt from the adviser registration requirements to the extent that
its activities in
relation to the Employee Share Offering require compliance with the adviser registration
requirements.
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications
(the "System"), the Commission des valeurs mobilières du Québec is
the principal
regulator for this application;
AND WHEREAS, unless otherwise defined, the terms herein have the meaning set
out in
National Instrument 14-101 Definitions or in Québec Commission Notice 14-101;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Filer is a corporation formed under the laws of France. The Filer is not and has no intention of becoming a reporting issuer (or equivalent) under the Legislation. The Shares of the Filer are listed on the Deutsche BÖrse, Euronext Paris and the New York Stock Exchange (in the form of American Depository Shares).
2. The Filer carries on business in Canada through the following affiliated companies:
Aventis Pharma Inc., Aventis Pharma Services Inc., Aventis Pasteur Limited, Aventis
Behring Canada, Inc and Dermik Laboratories Canada Inc. (the "Canadian
Affiliates" and, together with the Filer and other affiliates of the Filer, the
"Aventis Group"). Each of the Canadian Affiliates is a direct or indirect
controlled subsidiary of the Filer and is not, and has no intention of becoming,
a
reporting issuer (or equivalent) under the Legislation.
3. The Filer has established Horizon 2003, a worldwide stock purchase plan for
employees
of the Aventis Group (the "Employee Share Offering") which is comprised of two
plans: (i) an offering of Shares to be subscribed through the Classic Fund (the
"Classic Plan") and (ii) an offering of Shares to be subscribed through the
Leveraged Fund (the "Leveraged Plan").
4. Only persons who are permanent employees of a member of the Aventis Group
at the time
of the Employee Share Offering (the "Qualifying Employees") are eligible
to
participate in the Employee Share Offering.
5. The Funds are established for the purpose of implementing the Employee Share Offering.
The Funds are not and have no intention of becoming reporting issuers (or equivalent)
under the Legislation.
6. The Funds are collective shareholding vehicles of a type commonly used in France for
the conservation or custodianship of shares held by employee investors. Only Qualifying
Employees will be allowed to hold Units of the Funds, and such holdings will be in amounts
proportionate to their respective investments in the Funds.
7. Under French law, all Units of either Fund acquired in the Employee Share
Offering will
be subject to a hold period (the "Hold Period") of approximately five
years, subject to certain exceptions prescribed by French law (such as an earlier
release on
death, permanent disability, termination of employment or retirement).
8. In the event of an early unwind resulting from the Canadian Participant exercising one
of the exceptions to the Hold Period, a Canadian Participant may redeem Units (a) in the
Classic Fund in consideration for the underlying Shares or the cash equivalent, or (b) in
the Leveraged Fund according to the Redemption Formula (described below) but using the
market value of the Shares at the time of unwind to measure the Appreciation Amount
(described below), if any, equal to the then-market value of the Shares held by the
applicable Fund, to be settled in cash.
9. At the end of the Hold Period, Canadian Participants who wish to redeem their Units may
redeem their Units (a) in the Classic Fund in consideration for the underlying Shares, or
(b) in the Leveraged Fund according to the Redemption Formula (described below), to be
settled by delivery of such number of Shares equal to such amount.
10. After the end of the Hold Period and after any redemptions made at that time, the
Leveraged Fund will be dissolved and the assets (including Shares) in the Leveraged Fund
which Canadian Participants wish to keep invested will be transferred to and held by the
Classic Fund. Those Canadian Participants will receive equivalent Units in the Classic
Fund.
11. At any time following the end of the Hold Period, Canadian Participants may redeem
their Units through the Classic Fund.
12. Under the Classic Plan, Canadian Participants will purchase Units in the
Classic Fund, and the Classic Fund will subscribe for an equivalent number of
Shares. The purchase price
for each Unit will be calculated as the closing price of the Shares on the day
of approval of the Employee Share Offering by the board of directors of the Filer
(the "Reference
Price"), less a 15% discount. Dividends paid on the Shares held in the Classic
Fund will be capitalized and investors will be credited with additional Units
or fractions of
Units.
13. Under the Leveraged Plan, Canadian Participants will subscribe for Units
in the Leveraged Fund, and the Leveraged Fund will then subscribe for Shares
using the Employee
Contribution (as described below) and certain financing made available by a major
European
bank, Deutsche Bank A.G. (the "Bank").
14. As with the Classic Plan, Canadian Participants in the Leveraged Plan Offering enjoy
the benefit of a 15% discount in the Reference Price. Under the Leveraged Plan, the
Canadian Participants effectively receive a share appreciation entitlement in the increase
in value, if any, of the Shares financed by the Bank Contribution (described below).
15. Participation in the Leveraged Plan represents an opportunity for Qualifying
Employees potentially to obtain significantly higher gains than would be available
through
participation in the Classic Plan, by virtue of the Qualifying Employee's indirect
participation in a financing arrangement involving a swap agreement (the "Swap
Agreement") between the Leveraged Fund and the Bank. In economic terms, the Swap
Agreement effectively involves the following exchange of payments: for each Share which
may be purchased by the Qualifying Employee's contribution (the "Employee
Contribution") under the Leveraged Plan at the Reference Price less the 15% discount,
the Bank will lend to the Fund (on behalf of the Canadian Participant) an amount
sufficient to enable the Fund (on behalf of the Canadian Participant) to purchase an
additional nine Shares (the "Bank Contribution") at the Reference Price
less the
15% discount.
16. At the time the Canadian Participant's obligations under the Swap Agreement
are
settled (the "Settlement Date") (expected to be at the end of the Lock-Up
Period, but an early unwind may result from the Canadian Participant satisfying
one of the exceptions to the Hold Period) the Canadian Participant will, for
each Unit held by the
Canadian Participant, be entitled to retain from the proceeds of the ten Shares
then held by the Fund (on behalf of the Canadian Participant), an amount equal
to:
(a) the current value of one Share (that would have been purchased by the Employee
Contribution); and
(b) approximately 50% of the amount of the appreciation in value, if any, of
the nine Shares purchased by the Bank Contribution above the Reference Price
for such nine Shares
(that is, approximately 50% of any increase in the value of such shares over
the Reference
Price) (the "Appreciation Amount").
At the Settlement Date, the Leveraged Fund, on behalf of the Canadian Participant, will be
required to remit an amount equal to the balance of the proceeds of the ten Shares then
owned or deemed to be owned by such Canadian Participant to the Bank. This payment
obligation may be satisfied by the transfer of Shares to the Bank by the Leveraged Fund.
17. Canadian Participants who wish to retain all their Shares at the end of the Hold
Period, (i.e. the Shares subscribed to by the Leveraged Fund with their Employee
Contribution and the corresponding Bank Contribution) may elect to pay to the Leveraged
Fund an amount equal to the amount due to the Bank under the Swap Agreement in respect of
such Canadian Participant's investment.
18. Under French law, the Funds, as FCPEs, have limited liability. The risk statement
provided to Canadian Participants will confirm that, under no circumstances, will a
Canadian Participant in the Leveraged Plan be liable to any of the Leveraged Fund, the
Bank or the Filer for any amounts in excess of his or her Employee Contribution under the
Leveraged Plan.
19. During the term of the Swap Agreement, dividends paid on the Shares held in the
Leveraged Fund will be remitted to the Leveraged Fund, and the Leveraged Fund will remit
an equivalent amount to the Bank as partial consideration for the obligations assumed by
the Bank under the Swap Agreement.
20. For Canadian federal income tax purposes, the Canadian Participants will 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 Fund,
notwithstanding the actual non-receipt of the dividends by the Canadian Participants by
virtue of the terms of the Swap Agreement. Consequently, Canadian Participants will be
required to fund the tax liabilities associated with the dividends without recourse to the
actual dividends.
21. The declaration of dividends on the Shares remains at the sole discretion of the board
of directors of the Filer. The Filer has not made any commitment to the Bank as to any
minimum payment in respect of dividends.
22. 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 Canadian Participants in the Leveraged Plan for all tax costs to the Canadian
Participants associated with the payment of dividends in excess of a specified amount per
Share during the Hold Period such that, in all cases, a Canadian Participant will, at the
time of the original investment decision, be able to quantify, with certainty, his or her
maximum tax liability in connection with dividends received by the Leveraged Fund on his
or her behalf under the Leveraged Plan.
23. At the time the Canadian Participant's obligations under the Swap Agreement are
settled (expected to occur on the Settlement Date at the end of the Hold Period), the
Canadian Participant will 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
Fund, on behalf of the Canadian Participant, from the Bank exceed (or are less than)
amounts paid by the Leveraged Fund, on behalf of the Canadian Participant to the Bank. To
the extent that dividends on Shares that are deemed to have been received by a Canadian
Participant are paid by the Leveraged Fund on behalf of the Canadian Participant to the
Bank, such payments will reduce the amount of any capital gain (or increase the amount of
any capital loss) to the Canadian Participant under the Swap Agreement. Capital losses
(gains) realized by a Canadian Participant under the Swap Agreement may 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).
24. The Swap Agreement will terminate at the end of the Hold Period. After the
final swap payments are made, the Canadian Participant may elect to redeem the
Leveraged Fund Units
in consideration for a payment of an amount equal to the value of the Canadian
Participant's Employee Contribution and the Canadian Participant's portion of
the Appreciation Amount, if any, to be settled by delivery of such number of
Shares equal to
such amount (the "Redemption Formula"). Following these redemptions,
all assets (including Shares) remaining in the Leveraged Fund will be transferred
to the Classic
Fund. New Units of the Classic Fund will be issued to the applicable Canadian
Participants in recognition of the assets transferred to the Classic Fund. The
Canadian Participants
may redeem the new Units whenever they wish.
25. The Manager is an asset management company governed by the laws of France. The Manager is registered with the French Commission des Opérations de Bourse (the "COB") to manage French investment funds and complies with the rules of the COB. The Manager is not and has no intention of becoming a reporting issuer (or equivalent) under the Legislation.
26. The Manager may, for the Fund's account, acquire, sell or exchange all securities in
the portfolio of each Fund. Each Fund's portfolio will principally include Shares. The
Classic Fund's Portfolio will also include, from time to time, cash in respect of
dividends paid on the Shares. The Leveraged Fund's Portfolio will include the Swap
Agreement. The portfolio of either Fund may include cash or cash equivalents which the
Funds may hold pending investments in Shares and for purposes of Unit redemptions. The
Manager's portfolio management activities in connection with the Employee Share Offering
and the Funds are limited to purchasing Shares from the Filer in accordance with the
Classic Plan and the Leveraged Plan, fulfilling redemption requests, and such activities
as may be necessary to give effect to the Swap Agreement.
27. Any redemption charges will be charged to the holder of the Units and will accrue to
the relevant Fund. All management charges relating to a Fund will be paid from the Fund's
assets.
28. The Manager is also responsible for preparing accounting documents and publishing
periodic informational documents as provided by the rules of each Fund. The Manager's
activities in no way affect the underlying value of the Shares.
29. Shares issued in the Employee Share Offering will be deposited in the relevant
Fund
through Natexis Banques Populaires (the "Depositary"), a French commercial
bank
subject to French banking legislation.
30. Under French law, the Depositary must be selected by the Manager from among a limited
number of companies identified on a list by the French Minister of the Economy, and its
appointment must be approved by the COB. The Depositary carries out orders to purchase,
trade and sell securities in the portfolio and takes all necessary action to allow each
Fund to exercise the rights relating to the securities held in its respective portfolio.
31. The Qualifying Employees resident in Canada will not be induced to participate in the
Employee Share Offering by expectation of employment or continued employment.
32. The total amount invested by a Canadian Participant in the Employee Share Offering,
including the Canadian Participant's investment in the Classic Plan and both the Employee
Contribution and Bank Contribution in the Leveraged Plan, may not exceed 25% of his or her
gross annual compensation, although a lower limit may be established by the Canadian
Affiliates.
33. None of the Filer, the Manager, the Canadian Affiliates or any of their employees,
agents or representatives will provide investment advice to the Qualifying Employees with
respect to an investment in the Units.
34. The Filer will retain a securities dealer registered as a broker/investment
dealer
under the Legislation of Ontario and Manitoba (the "Registrant") to
provide advisory services to any Canadian Participants resident in Ontario or
Manitoba who have
expressed an interest in the Leveraged Plan, to assist them in determining the
suitability of the proposed Leveraged Plan investment based on their particular
financial
circumstances. The Registrant would establish accounts for, and would receive
the initial account statements from the Leveraged Fund on behalf of such Canadian
Participants.
35. Units of the Leveraged Fund will be issued to Canadian Participants resident in
Ontario or Manitoba solely through the Registrant. The Units will be evidenced by account
statements issued by the Leveraged Fund.
36. The Canadian Participants will receive an information package in the French or English
language, at their option, that will include:
(a) a summary of the terms of the Employee Share Offering,
(b) a tax notice relating to the relevant Fund containing a description of the Canadian
income tax consequences of subscribing for and holding the Units in the Funds, and
redeeming Units at the end of the Hold Period, and
(c) a risk statement describing certain risks associated with an investment in Units
pursuant to the Leveraged Plan and a tax calculation document illustrating the general
Canadian federal income tax consequences of participating in the Leveraged Plan.
37. Upon request, Canadian Participants may receive copies of the Filer's annual report on Form 20-F filed with the United States Securities and Exchange Commission (the "SEC") and/or the French Document de Référence filed with the COB in respect of the Shares and a copy of the relevant Fund's rules (which are analogous to company by-laws). The Canadian Participants will also receive copies of the continuous disclosure materials relating to the Filer furnished to shareholders generally.
38. The Filer will provide contractual rights of action to those Canadian Participants who
participate in the Leveraged Plan if the offering documents provided to the Canadian
Participants contain a material misrepresentation in respect of the Leveraged Plan
Offering.
39. It is not expected that there will be any market for the Units or Shares in Canada.
40. There are approximately 1,814 Qualifying Employees resident in Canada, in
the provinces of British Columbia (36), Alberta (34), Saskatchewan (6), Manitoba
(11), Ontario
(1,118), Québec (583), New Brunswick (6), Nova Scotia (15) and Newfoundland and
Labrador (5) who represent in the aggregate less than 5.0% of the number of Qualifying
Employees
worldwide.
41. As of the date hereof and after giving effect to 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 Funds on behalf of Canadian
Participants) more than 10 per cent of the Shares and do not and will not represent in
number more than 10 per cent of the total number of holders of the Shares as shown on the
books of the Filer.
AND WHEREAS pursuant to the MRRS this Decision Document evidences the decision
of each
Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the
Legislation that provides the Decision Maker with the jurisdiction to make the Decision
has been met;
THE DECISION of the Decision Makers under the Legislation is that:
(a) the prospectus requirements shall not apply to trades in Units of the Funds made pursuant to the Employee Share Offering to or with the Canadian Participants, provided that the first trade in Units acquired by Canadian Participants pursuant to this Decision, in a Jurisdiction, shall be deemed a distribution or a primary distribution to the public under the Legislation of such Jurisdiction;
(b) the registration requirements shall not apply to:(i) trades in Units of the Classic Fund made pursuant to the Employee Share Offering to or with Canadian Participants; and
(ii) trades in Units of the Leveraged Fund made pursuant to the Employee Share Offering to or with Canadian Participants not resident in Ontario and Manitoba;(c) the registration and prospectus requirements shall not apply to:
(i) trades of Shares by the Funds to the Canadian Participants upon the redemption of Units by Canadian Participants pursuant to the Employee Share Offering; and
(ii) the issuance of Units of the Classic Fund to holders of Leveraged Fund Units upon the transfer of the assets of the Leveraged Fund to the Classic Fund;
provided that the first trade in any such Shares or Units acquired by a Canadian Participant pursuant to this Decision, in a Jurisdiction, shall be deemed a distribution or a primary distribution to the public under the Legislation of such Jurisdiction;(d) the registration and prospectus requirements shall not apply to the first trade in any Shares acquired by a Canadian Participant under the Employee Share Offering provided that such trade is:
(i) made through a person or company who/which is appropriately licensed to carry on business as a broker/dealer (or the equivalent) under the applicable securities legislation in the foreign jurisdiction where the trade is executed; and
(ii) executed through the facilities of a stock exchange outside of Canada; and(e) the Manager shall be exempt from the adviser registration requirements, where applicable, in order to carry out the activities described in paragraphs 26 and 28 hereof.
DATED September 19th, 2003.
Josée Deslauriers
Directrice du marché des capitaux