Securities law reforms aimed at making it easier for businesses to implement employee share schemes have been adopted and will become effective on 1 October 2022. Originally announced last year, the reforms change the way in which offers under employee share schemes (ESS offers) are regulated. It is expected that the new law will replace the current exemptions from prospectus and licensing requirements contained in ASIC Class Orders 14/1000 and 14/1001.
As noted in our September 2021 alert, the key exemptions for ESS offers are currently contained in ASIC Class Orders 14/1000 and 14/1001. These exemptions enable companies to make ESS offers without needing to prepare a prospectus (or similar document) or hold an Australian financial services licence (AFSL).
The conditions in Class Order 14/1000 are typically easy to satisfy, and the exemption has proved a popular way for listed (i.e., publicly-traded) companies, both Australian and foreign, to operate employee equity plans in Australia. In contrast, Class Order 14/1001, which applies to unlisted (i.e., privately-held) companies, contains a number of restrictive conditions which have made it much more difficult to use. In particular, Class Order 14/1001 can only be used where the total value of awards granted to any one employee in any 12-month period is no more than AUD 5,000.
The new law inserts exemptions into the Corporations Act 2001 (Cth) (CA) which are analogous to the existing Class Orders....
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