SEC Division of Corporation Finance no-action letter: Accenture Ltd

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Securities Exchange Act of 1934 - Rule 13e-4

Jaunary 10, 2003 Response of the Office of Mergers and Acquisitions

Division of Corporation Finance

Alan D. Schnitzer, Esq. Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017

Re:

Accenture Ltd. Incoming letters dated October 17, 2002, December 2, 2002, and December 31, 2002

Dear Mr. Schnitzer:

In regard to your letters dated October 17, 2002, December 2, 2002, and December 31, 2002, as supplemented by conversations with the staff, our letter is attached to the enclosed photocopy of your letter. By doing this, we avoid having to recite or summarize the facts set forth in your letters. Each defined term in our response has the same meaning as in your letters, unless otherwise noted.

Based on the facts presented, and not necessarily concurring in your analysis, the Division of Corporation Finance will not recommend enforcement action to the Commission if Accenture Ltd. conducts the Program as described in your letters without compliance with Rule 13e-4 under the Securities Exchange Act of 1934.

This position is based on the representations made to the Division in your letters. Any different facts or conditions might require the Division to reach a different conclusion. Further, this response only represents the Division's position on enforcement action. It does not express any legal conclusion on the questions presented.

Sincerely,

Michele M. Anderson Special Counsel Office of Mergers & Acquisitions Division of Corporation Finance

Incoming Letter

VIA FACSIMILE

December 31, 2002

Re:

Treatment of Share Repurchase Program under Rule 13e-4 promulgated under Section 13(e) of the Securities Exchange Act of 1934, as Amended

Tina Chalk, Esq. Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549

Dear Ms. Chalk:

I refer to our letters of October 17 and December 2, 2002 relating to the proposal by Accenture Ltd to establish a share repurchase program for the purpose of providing a convenient way for non-executive level employees of Accenture Ltd and its subsidiaries to sell Class A common shares of Accenture Ltd received in connection with awards of restricted share units free of charges and brokerage commissions, as more fully described in our October 17 and December 2 letters. The Staff has previously granted relief to an employee stock purchase program similar to the one proposed by Accenture Ltd. See Westamerica Bancorporation (available June 20, 1996).

You have requested that we distinguish the proposed share repurchase program from exchange offers conducted by issuers to reprice their employees' stock options.

First, as the Division of Corporation Finance has noted, exchange offers conducted to reprice employee stock options frequently require option holders to agree to revised vesting or exercisability terms or to accept a reduced number of securities in exchange for receiving a lower exercise price. The new options or other securities offered in exchange for existing options are generally offered in reliance on an exemption from registration under the Securities Act of 1933, as amended. Accordingly, such exchange offers typically require option holders to make a complex investment decision for which they may not, in the absence of the application of the Williams Act, have adequate information. In the case of the proposed share repurchase program, employees are simply offered on an ongoing basis the opportunity to sell their shares to Accenture at the market price of the Class A common shares determined by a uniformly applied formula based on the price of the Class A common shares on the New York Stock Exchange.

Second, issuers conduct exchange offers to reprice employee stock options in furtherance of their compensation policies and therefore have the incentive to encourage option holders to tender their options in the exchange offer. In contrast, Accenture intends the proposed share repurchase program as a service to its non-executive employees to permit them to sell some or all of their eligible shares without having to bear the cost of a broker/dealer 1 and will not solicit, encourage or recommend its employees' participation in the program. Any materials disseminated to employees about the proposed share repurchase program will simply provide current information and procedures governing the purchase of eligible shares by Accenture and will indicate that employees are not obligated to sell their shares. Such materials will explicitly state that Accenture makes no recommendation that employees participate in the program.

Third, exchange offers conducted to reprice employee stock options are typically open for only a limited period of time. Accenture intends that the proposed share repurchase program will be available to its employees on an ongoing basis, subject only to suspensions during established blackout periods consistent with Accenture's trading policy for its executive officers and other times when Accenture is in possession of material, non-public information. While shares purchased by Accenture under the program will be subject to an annual limit of 5% of Accenture Ltd's outstanding Class A common shares, Accenture does not expect that this limit will cause annual suspensions of the program.

Fourth, an exchange offer conducted to reprice employee stock options may be structured so that it results in the option holder being offered new options or other securities having a value that is at a significant premium over the value of the options then held by the option holder. As discussed in our December 2 letter and noted above, Accenture proposes to pay a price per share pursuant to the share repurchase program that equals the market price of the Class A common shares determined by a uniformly applied formula based on the price of the Class A common shares on the New York Stock Exchange. While employees that sell eligible shares to Accenture will not bear the cost of a broker/dealer that they might otherwise incur, we do not believe that this results in employees being offered a premium for their shares over the prevailing market price of the Class A common shares.

For the foregoing reasons we believe the proposed share repurchase program is significantly and substantively different from exchange offers conducted by issuers to reprice their employees' stock options. Accordingly, we do not believe that the Staff's position with respect to such exchange offers should cause Accenture's request to be treated differently than the request of Westamerica Bancorporation. Further, as discussed in our October 17 letter, we believe the proposed share repurchase program does not contain the tender offer characteristics identified in the Wellman case and that it should not constitute a tender offer or an "issuer tender offer" within the meaning of Rule 13e-4 under the Securities Exchange Act of 1934, as amended. Nor do the transactions contemplated under the proposed share repurchase program involve abuses of the type that the Williams Act was enacted to prevent.

We would be grateful for the Staff's response to our request for relief as soon as convenient so that Accenture may make the proposed share repurchase program available to its non-executive employees in respect of Class A common shares that will be issued to them in January 2003.

If you have any questions concerning the foregoing, or if you require any additional information, please do not hesitate to contact Alan Schnitzer at (212) 455-2961 or me at (212) 455-3986. If for any reason you do not concur with our conclusions, we would appreciate the opportunity to confer with you by telephone prior to any written response to this letter.

Very truly yours,

Joshua Ford Bonnie

cc:

Accenture Ltd Douglas G. Scrivner, Esq. Simpson Thacher & Bartlett Alan D. Schnitzer

Incoming Letter

VIA FACSIMILE

December 2, 2002

Re:

Treatment of Share Repurchase Program under Rule 13e-4 promulgated under Section 13(e) of the Securities Exchange Act of 1934, as Amended

Tina Chalk, Esq. Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549

Dear Ms. Chalk

I refer to our letter of October 17, 2002 relating to the proposal by Accenture Ltd to establish a share repurchase program for the purpose of providing a convenient way for non-executive level employees of Accenture Ltd and its subsidiaries to sell Class A common shares of Accenture Ltd received in connection with awards of restricted share units free of charges and brokerage commissions, as more fully described in the October 17 letter.

In connection with your review of the request for relief contained in the October 17 letter, I wanted to bring to your attention two changes to that letter, neither of which we view as consequential to the relief requested.

First, Accenture Ltd and its subsidiaries had approximately 74,231 non-executive level employees as of August 31, 2002. The October 17 letter had stated this number to be 76,864 as of August 31, 2002.

Second, under the proposed program, when share sale instructions are received from an employee during New York Stock Exchange trading hours, the Company will pay a price per share equal to the last reported bid price of the Class A Common Shares on the New York Stock Exchange at the time such instructions are received. When share sale instructions are received from an employee after New York Stock Exchange trading hours, the Company will pay a price per share equal to the first reported sale price of the Class A Common Shares on the next trading day. The October 17 letter had stated that the Company would in all cases pay a price per share equal to the last reported sale price of the Class A Common Shares. While the Company plans to develop the proposed program in a manner that will allow employees to issue share sale instructions that will include a "limit order" component, the consideration to be paid pursuant to the program will always be determined by a uniformly applied formula based on the market price of the Class A Common Shares.

Accenture would like to make the program available to its non-executive employees in respect of shares that will be issued to them and will become available for sale in January 2003. Accordingly, we would be grateful for the Staff's response to our request for relief as soon as convenient so that if the request for relief is granted, Accenture can begin to organize the necessary logistics. We would appreciate learning at the first opportunity of any concerns that you have regarding our request. If you have any questions concerning the foregoing, or if you require any additional information, please do not hesitate to contact Alan D. Schnitzer at (212) 455-2961 or me at (212) 455-3986.

Very truly yours,

Joshua Ford Bonnie

cc:

Accenture Ltd Douglas G. Scrivner, Esq. Simpson Thacher & Bartlett Alan D. Schnitzer

Incoming Letter

VIA FEDEX

October 17, 2002

Re:

Treatment of Share Repurchase Program under Rule 13e-4 promulgated under Section 13(e) of the Securities Exchange Act of 1934, as Amended

Office of Chief Counsel Division of Market Regulation Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549

Ladies and Gentlemen:

Accenture Ltd, a Bermuda company ("Accenture Ltd"), proposes to establish a share repurchase program for the purpose of providing a convenient way for non-executive level employees (i.e., employees other than Partners 2 ) of Accenture Ltd and its subsidiaries to sell certain Class A common shares, par value $0.0000225 per share ("Class A Common Shares"), of Accenture Ltd free of charges and brokerage commissions, as more fully described in Part IV of this letter (the "Program").

1. Requested No-Action and Exemptive Position

On behalf of Accenture Ltd, we seek relief from Rule 13e-4 promulgated under Section 13(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for the Program. Provided that the Program operates in the manner represented in this letter, we request the Staff's concurrence that the Program will not constitute an "issuer tender offer" subject to Rule 13e-4, or, if the Staff considers the Program to be a tender offer, we request that the Program be exempted from Rule 13e-4 pursuant to paragraph (h)(9) thereof, because the type of transaction contemplated under the Program will not constitute a fraudulent, deceptive or manipulative act or practice comprehended within the purpose of the rule.

The Staff of the Securities and Exchange Commission (the "Commission") has previously granted relief from Rule 13e-4 to a similar employee stock repurchase program. See Westamerica Bancorporation (available June 20, 1996) (the "Westamerica Letter").

2. Background

Accenture is a global management consulting and technology services organization. Prior to its transition to a corporate structure in 2001, Accenture operated as a series of related partnerships and corporations under the control of its Partners. Accenture Ltd, the ultimate parent company of the Accenture organization, is a Bermuda holding company with no material assets other than an equity interest in its subsidiary, Accenture SCA, a Luxembourg partnership limited by shares ("Accenture SCA"). Accenture Ltd's only business is to hold this interest and to act as the sole general partner of Accenture SCA. As the sole general partner of Accenture SCA and as a result of Accenture Ltd's majority voting interest in Accenture SCA, Accenture Ltd controls Accenture SCA's management and operations and consolidates Accenture SCA's results in its financial statements. Accenture operates its business through subsidiaries of Accenture SCA.

As of August 31, 2002, Accenture Ltd and its subsidiaries had approximately 76,864 non-executive level employees and 2,633 Partners.

3. The Class A Common Shares

As of August 31, 2002, Accenture Ltd had 407,406,436 Class A Common Shares outstanding. The Class A Common Shares have been registered under Section 12(b) of the Exchange Act and are listed on the New York Stock Exchange. During the six-month period ending August 31, 2002, the average daily trading volume of the Class A Common Shares was 2,957,528, with prices ranging from a low of $13.70 on July 24, 2002 to a high of $30.50 on March 8, 2002. The average closing price of the Class A Common Shares for the same six-month period was approximately $20.71. By Accenture Ltd's recent estimate, 1.0% of the outstanding Class A Common Shares are owned by its non-executive level employees, and of the approximately 74,000 grants of restricted share units awarded to employees in connection with the initial public offering of the Class A Common Shares, approximately 42,000 were for fewer than 100 shares.

4. The Repurchase Program

As a service to its employees, Accenture Ltd proposes to establish the Program pursuant to which it will repurchase certain Class A Common Shares held by its non-executive level employees that are employed at the time of the sale. The Class A Common Shares eligible to be sold in the Program must have been received from Accenture pursuant to Accenture Ltd's share incentive plans and issued pursuant to restricted share units granted in connection with the initial public offering of the Class A Common Shares. We refer to the Class A Common Shares eligible to be sold in the Program as the "Award Shares."

The Program will permit any non-executive level employee that owns an Award Share the opportunity, solely at his or her own discretion, to sell some or all of his or her Award Shares from time to time directly to Accenture without having to bear the cost of a broker/dealer.

Under the Program, the Company will pay a price for each Award Shares that is equal to the last reported sale price of the Class A Common Shares on the New York Stock Exchange at the time the relevant share sale instructions are received by Accenture. Accenture intends to outsource the administration of the Program to a third-party. However, Accenture will bear all the costs of such third party and there are no fees, commissions, or other costs to the employee in selling Award Shares to Accenture except for applicable transfer taxes, if any. Settlement procedures for the sale of Award Shares under the Program will be in compliance with Rule 15c6-1 under the Exchange Act.

Accenture Ltd will effect repurchases under the Program only during established window periods of a minimum of 20 business days. In addition, the Program will permit Accenture to suspend operation of the Program at any time, including times when Accenture is in possession of material, non-public information.

Accenture Ltd intends that the Program will be available to its employees on an ongoing basis without any time limit (subject to the above-referenced window periods, suspensions and any possible amendment or termination in the future). Award Shares purchased by Accenture under the Program will be purchased on a "first come, first served" basis up to an annual limit of 5% of Accenture Ltd's outstanding Class A Common Shares.

Accenture will not actively solicit or control its employees' participation in the Program either publicly or privately. Any materials disseminated to employees about the Program will simply provide current information and procedures governing the purchase of the Award Shares by Accenture. The Program materials will indicate that employees are not obligated to sell their Award Shares and will not contain any recommendation that employees participate in the Program.

5. Discussion

Rule 13e-4 promulgated under the Exchange Act governs "issuer tender offers," which are defined in paragraph (a)(2) thereof to refer to "a tender offer for, or a request or invitation for tenders of, any class of equity security, made by the issuer of such class of equity security or by an affiliate of such issuer."

In Wellman v. Dickinson , 475 F. Supp. 783, 823-84 (S.D.N.Y. 1979) the court identified eight factors, the presence of which would influence the court in determining whether or not there is a tender offer:

(1) active and widespread solicitation of public shareholders;

(2) solicitation of a substantial percentage of an issuer's stock;

(3) offer made at a premium over the prevailing market price;

(4) terms of the offer are firm rather than negotiable;

(5) offer is contingent on tender of a fixed number of shares;

(6) offer open only for a limited period of time;

(7) the offeree is subjected to pressure to sell his stock; and

(8) public announcement of the purchasing program prior to a rapid accumulation of shares.

Under the proposed operation of the Program, only one of these factors, namely, the "offer open for limited period of time" factor could be found to exist in the Program. The window periods for transactions under the Program and the suspensions of Program operations may be viewed as time limits on the ongoing offer. Nonetheless, Accenture Ltd believes that the Program does not contain the case-law defined tender offer characteristics, and, consequently, that it should not constitute a tender offer or an "issuer tender offer" within the meaning of Rule 13e-4 under the Exchange Act.

Nevertheless, if the Staff were to consider the repurchase offer under the Program to constitute an "issuer tender offer," Accenture Ltd seeks relief from the Staff in the form of an exemption from Rule 13e-4 under paragraph 13e-4(h)(9) thereof.

Rule 13e-4 is designed to prevent fraudulent, deceptive or manipulative acts or practices in connection with issuer tender offers. Where offers for and exchanges of securities that are the subject of an issuer tender offer will not result in abuses of the type that the Williams Act was designed to prevent, the Commission has reserved the right to grant an exemption from all or a part of Rule 13e-4 pursuant to paragraph (h)(9) of that section. Rule 13e-4(h)(9) provides that the issuer tender offer rules of 13e-4 shall not apply to, "[a]ny other transaction or transactions, if the Commission, upon written request or upon its own motion, exempts such transaction or transactions, either unconditionally, or on specified terms and conditions as not constituting a fraudulent, deceptive or manipulative act or practice comprehended within the purpose of this section." The transactions contemplated under the Program do not involve abuses of the type the Williams Act was enacted to prevent.

In particular, based on elements which the Staff identified in the Westamerica Letter, Accenture Ltd notes that the Program has the following seven characteristics:

the Program is open solely to all then current non-executive level employees of Accenture who own Award Shares;

the Program will be open during periods of a minimum of 20 business days;

decisions whether to participate in the Program and the amount of shares to be tendered will be at the sole discretion of the employee;

Accenture will not encourage or discourage participation in the Program;

the annual amount of purchases by Accenture in the Program will be limited to a maximum of 5% of the total Class A Common Shares outstanding;

the consideration to be paid pursuant to the Program will be determined by a uniformly applied formula based on the market price of the Class A Common Shares; and

Accenture will settle with participating employees within the time frame required by Rule 15c6-1 under the Exchange Act.

6. Conclusion

On the basis of the representations made above, we respectfully request that either:

the Staff will not recommend any enforcement action against Accenture to the Commission if Accenture proceeds according to the procedures described above and does not comply with the requirements of Rule 13e-4 promulgated under Section 13(e) of the Exchange Act because Accenture's offer and purchases under the Program do not constitute an "issuer tender offer"; or,

if considered to constitute an issuer tender offer, the Staff will grant Accenture Ltd relief from compliance because the Program's procedures are designed to avoid any fraudulent, deceptive or manipulative acts or practices comprehended within the purpose of Rule 13e-4 and, therefore, Accenture Ltd and the Program may be exempted from the issuer tender offer requirements of Rule 13e-4.

*

If you have any questions concerning the foregoing, or if you require any additional information, please do not hesitate to contact John B. Tehan at (212) 455-2675 or Alan D. Schnitzer at (212) 455-2961. If for any reason you do not concur with our conclusions, we would appreciate the opportunity to confer with members of the Staff by telephone prior to any written response to this letter.

Very truly yours,

SIMPSON THACHER & BARTLETT

cc:

Accenture Ltd Douglas G. Scrivner, Esq.

1

Of the approximately 74,000 grants of restricted share units awarded by Accenture to its employees in connection with the initial public offering of the Class A common shares, approximately 42,000 were for fewer than 100 shares.

2

We use the term "Partner" in Accenture's current structure to refer to executive employees of Accenture with the "Partner" title.

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Modified: 08/05/2003