CS 14 Proposed remake of relief for employee incentive schemes
Released 20 January 2025. Comments close 22 February 2025.
We propose to provide continuing relief to entities that need to issue financial products to employees and other eligible participants pursuant to options and incentive rights that were originally granted under Class Order [CO 14/1000] Employee incentive schemes: Listed bodies and Class Order [CO 14/1001] Employee incentive schemes: Unlisted bodies (EIS class orders).
The EIS class orders are due to expire on 1 April 2025. We intend to remake the relief in line with the draft legislative instrument linked below, which would have an effective period of 5 years.
We have assessed that the EIS class orders are operating effectively and efficiently, and continue to form a necessary and useful part of the legislative framework.
A consultation paper was not issued for this consultation.
Providing feedback
We invite feedback on our proposal. You should send your submission to rri.consultation@asic.gov.au by 5 pm AEDT on Friday 22 February 2025.
You may choose to remain anonymous or use an alias when providing feedback. However, if you do remain anonymous we will not be able to contact you to discuss your feedback should we need to.
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Background
Division 1A of Part 7.12 of the Corporations Act 2001 (ESS provisions) contains broad exemptions from disclosure and licensing requirements for offers of financial products to employees and other employee share scheme participants. The ESS provisions commenced on 1 October 2022 and replaced similar relief in the EIS class orders.
Stakeholders requested a transition period so that they could adjust their employee share schemes to the ESS provisions. ASIC therefore amended the EIS class orders so that new offers could be made until 1 March 2023 and remain open for acceptance until 1 April 2024: see ASIC Corporations (Amendment) Instrument 2022/1022 and Report 759 Response to submissions on CP 364 Modifications to the ESS regime (REP 759) at paragraph 8. We retained relief in the amended EIS class orders for secondary sales, advertising, licensing and contribution plans. This was due to feedback that schemes established under the EIS class orders may require entities to issue financial products for some years. For example, as a result of ‘overlying eligible products’ such as options or incentive rights granted under the EIS class orders, eligible participants may be entitled to receive ‘underlying eligible products’ such as shares.
The amended EIS class orders and related Class Order [CO 14/978] Employee incentive schemes: Personal offers are due to sunset on 1 April 2025 under section 50 of the Legislation Act 2003. Our proposed draft instrument combines the three class orders and provides continuing exemptions for secondary sales, licensing and contribution plans. Some of the exemptions only cover underlying eligible products, because entities should not need to issue further overlying eligible products. We are open to feedback on that matter.
Related links
ASIC invites feedback on proposed remake of employee incentive scheme instruments (news item)
Media Release (22-370MR) ASIC provides legislative relief to facilitate employee share schemes (20 December 2022)