The Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022 (the ESS Act), which received royal assent on 31 March 2022, introduces a new Division 1A into Part 7.12 of the Corporations Act 2001 (Cth). The ESS Act, which takes effect from 1 October 2022, will significantly decrease red tape for companies (especially startups) and registered schemes looking to attract, retain or reward employees through offers to participate in an employee share scheme (ESS).
Specifically, the ESS Act makes it easier for companies and registered schemes to access ‘regulatory relief’ from the Corporations Act’s securities disclosure, licensing, advertising, anti-hawking and on-sale regulatory requirements which would otherwise apply when making offers of interests under an ESS.
In order to make an offer of shares or options to investors or employees in Australia, the issuing body must comply with the following requirements of the Corporations Act (Disclosure Requirements), all of which take time and attract significant cost:
The disclosure requirements for the issue, sale and transfer of securities (Parts 6D.2 and 6D.3) and financial products (Part 7.9);
The restrictions on advertising of offers for the issue, sale and transfer of securities (section 734) or financial products (section 1018A);
The requirement to make a target market determination for a financial product and distribute financial products in accordance with a target market determination...
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