On 31 October 2014, ASIC released its updated Regulatory Guide 49 Employee Incentive Schemes (RG 49), together with two new class orders to facilitate the offer of a range of financial products under employee incentive schemes by listed and unlisted companies.
The new class orders and the updated RG 49 widen the scope of the exemptions available under the Corporations Act for employee incentive schemes, better reflecting market practice and circumstances where ASIC has been granting relief.
The changes under the new relief include changes to:
- the bodies that can make offers (e.g. offers can be made by an unlisted body’s wholly owned subsidiaries)
- the persons who can participate in offers (including non-executive directors, certain contractors and prospective employees or other participants; there is also the ability to renounce offers, in favour of specific associates of participants)
- the financial products that can be offered (e.g. incentive, or performance, rights may now be offered, including where wholly cash settled)
- the structures that can be used (e.g. trusts can be used by unlisted bodies)
- the general conditions applying to offer (e.g. the offer document must include general information about risks of acquiring and holding the financial product)
Further information is available in our update on employee incentive scheme relief in the March 2015 edition of Acumen).
In a related development, the Tax and Superannuation Laws Amendment (Employee Share Schemes) Bill 2015 has been introduced into the House of Representatives. It is intended to make Australia’s taxation of employee share schemes (ESS) internationally competitive, as well as to support start-up companies. This forms part of the Government’s Industry Innovation and Competitiveness Agenda, announced last October.