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11/11/14

ASIC facilitates employee incentive schemes with new class orders

Key Points

  • Offers under an employee incentive scheme can be made to more categories of people, including non-executive directors and certain contractors and casual employees.
  • A broader range of financial products can be offered.
  • Simplified ASIC notification requirements; no need to lodge offer documents with ASIC each time an offer is made.
  • Transitional provisions allow companies with employee incentive schemes that are relying on the relief provided by ASIC Class Order 03/184 or individual ASIC relief to continue have the benefit of that relief. 

Background

Offers under employee incentive schemes can trigger a range of obligations under the Corporations Act 2001 (Cth) in relation to disclosure and on-sale, financial services licensing, advertising, hawking and the incidental operation of a managed investment scheme.  Recognising the benefits of employee incentive schemes, ASIC has provided conditional class order relief from these obligations (formerly under ASIC Class Order 03/184 (CO 03/184)) and case-by-case relief where ASIC’s policy objectives as set out in its Regulatory Guide 49 were met.

However, the structure of employee incentive schemes has changed over the years, and CO 03/184 was not covering the new employee incentive schemes that companies wanted to put in place.  Further, in recent years there has been increasing confusion as to the operation of CO 03/184, in particular who can participate in an employee incentive scheme and what financial products can be offered.

Following a lengthy consultation period, on 30 October 2014 ASIC released new Class Orders [CO 14/1000] (for listed companies) (CO 14/1000) and [CO14/1001] (for unlisted companies) and a new Regulatory Guide 49 in relation to employee incentive schemes.  These documents can be found at this link.

This alert focuses on CO 14/1000, which provides relief to listed companies.

Key Changes

What you should do if you have an existing employee incentive scheme and you rely on the relief provided by ASIC Class Order 03/184 or have obtained specific relief from ASIC?

Listed companies that currently have an employee incentive scheme that relies on CO 03/184 or specific ASIC relief will continue to be able to rely on that relief provided the conditions of CO 03/184 or the relief instrument (as applicable) are met.

Therefore, whilst it is not necessary for a company with an existing employee incentive scheme that relies on CO 03/184 or specific relief to amend the scheme (or adopt a new scheme) as a consequence of the new CO 14/1000, it may wish to do so to take advantage of the expanded relief provided by the new CO 14/1000 (detailed in the table above) including:

(a) the broader categories of people that can participate in the scheme;

(b) the broader range of financial products that can be offered; and/or

(c) the less onerous ASIC notice requirements.

 

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