ASIC updates employee incentive schemes

The Australian Securities and Investments Commission (ASIC) has updated its regulatory guide and issued new class orders on employee incentive schemes.

The update to Regulatory Guide 49 Employee incentive schemes follows consultation paper 218 Employee incentive schemes. The regulator has replaced class order [CO 03/184] Employee share schemes with two new class orders to facilitate the offer of a range of financial products under employee incentive schemes. One class order relates to listed bodies and the other to unlisted bodies.

For both Australian and foreign listed companies, the new class orders will generally reduce the administrative burden involved in implementing employee incentive schemes, said law firm Allens Linklaters.

In particular, the class orders expressly cover a broader range of financial products, including performance rights, eliminating the need to apply to ASIC for individual relief in respect of certain schemes.

For unlisted companies, an exemption from the fundraising provisions is now available for offers of ordinary voting shares and performance rights over those shares, as well as options. However, the value of all financial products that may be offered to an individual scheme participant during any 12-month period is now capped at $5,000.

Allens warned the class order may not accommodate offers that would attract the recently announced tax concessions for shares awarded by start-up companies.

The regulator said the enhanced guide should help lessen business costs by reducing the red tape associated with notifications. 

It hopes the changes will enhance the relationship between an employer and its employees, with the objective of improving business performance, engaging employees and strengthening employee commitment.