ASIC has made a legislative instrument that facilitates employee share schemes (ESS).
The ESS provisions in Part 7.12 of the Corporations Act commenced on 1 October 2022 and ASIC’s relief seeks to remove unintended technical issues that stakeholders said will cause difficulties in practice. This follows a consultation ASIC undertook earlier in the year.
The legislative instrument provides:
- a broader exemption for secondary sales of financial products that are quoted on a financial market;
- more options for the financial information that foreign companies can provide ESS participants;
- the ability to provide an expert valuation of ESS interests that are not ordinary shares (in addition to the other valuation methods set out in s1100X(3));
- technical relief so that salary sacrificing arrangements can comply with the requirements for contribution plans;
- clarification that financial products offered outside this jurisdiction do not need to be included when calculating the issue cap in s1100V.
The ESS regime is intended to replace ASIC’s existing relief for employee incentive schemes in Class Order [CO 14/1000] Employee Incentive Schemes: Listed bodies and Class Order [CO 14/1001] Employee Incentive Schemes: Unlisted bodies. From 1 March 2023 entities will be unable to make new offers under these class orders.
Download
ASIC Corporations (Employee share schemes) Instrument 2022/1021
ASIC Corporations (Amendment) Instrument 2022/1022
Background
ASIC consulted on this relief in Consultation Paper 364 Modifications to the ESS regime (CP 364). ASIC received 13 responses to CP 364 and will publish a report on submissions received in early 2023.