As we were going to press with our December 2013 Clients & Friends Newsletter, the Australian Securities and Investments Commission (“ASIC”) issued a consultation paper describing its proposed revisions to Class Order 03/184 to, among other things, expand coverage of the class order exemption to RSUs and SARs.
Upon inspection of the November 13, 2013 consultation paper, the ASIC contemplates a number of noteworthy and welcome changes to the class order, including:
Broadening the scope of award recipients covered by the class order to include independent contractors, “casual employees,” prospective employees, and in some cases, non-executive directors.
Broadening the scope of financial products offered under an employee incentive scheme to include, RSUs, SARs and performance rights (including cash-settled performance rights).
Expanding the definition of “contribution plan” to include salary deferral arrangements.
Amending / introducing a number of general conditions that apply to equity compensation offerings made by listed entities in reliance on the class order, such as:
(a) reducing the period of quotation for listed companies from 12 months to 3 months,
(b) establishing a requirement that award recipients must not receive 25% or more of the underlying shares for a period of at least 12 months,
(c) replacing the requirement to lodge offer materials with ASIC with a simple notification requirement;
(d) establishing a baseline standard for presenting information in the offer documents and requiring the inclusion of appropriate risk disclosure.
The public comment period for the consultation paper concluded in January 2014 and the ASIC currently is expected to publish the final revised class order sometime during the second quarter of 2014.
In the interim, companies that are granting RSUs and SARs to employees in Australia should proceed with caution. Companies that previously secured ASIC exemptive relief in connection with the grant of RSUs or SARs generally can make new grants in reliance on such existing relief (although the ASIC is contemplating a transitional period for the revised class order, after which the specific relief instruments previously issued by the ASIC covering the grant of RSUs will be revoked).
However, companies that are granting RSUs or SARs to employees in Australia that have not previously secured an order of exemptive relief from the ASIC should either delay such grants until the revised class order is published or pursue a current order of exemptive relief from the ASIC (which continues to issue such relief expeditiously).
For additional information on the expected changes to the class order and guidance on the appropriate course of action for your company, please contact your contact your GES attorney.
For more information:
• Narendra Acharya
• June Anne Burke
• Edward Burmeister
• Valerie Diamond
• Denise Glagau
• Sinead Kelly
• Barbara Klementz
• Aimee Soodan
• Alison Wright
• Brian Wydajewski
Learn more about our
Global Equity Services Practice