The Australian Securities and Investment Commission (ASIC)
released its updated policy on Share Purchase Plans (SPPs) this
week with Class Order 10/105 and the updated Regulatory Guide 125.
The policy widens the ability of those who hold securities as
custodians or trustees to participate in SPPs, rectifying what had
been considered as deficiencies in the relief in the previous
policy. The new policy also confirms that applicants are able to
use electronic payment facilities.
ASIC introduced changes to the policy relating to SPPs in June
2009, increasing the investment limit from $5,000 to $15,000 per
registered holder in an attempt to encourage more participation by
retail investors. The 2009 changes also aimed to enable custodian
holders to participate in SPPs. However, it has become apparent
since that time that there were some problems with the policy due
to the restrictions on the definition of 'custodian'.
An SPP is a plan offered to existing shareholders by a company
listed on the Australian Securities Exchange (ASX). ASIC has given
relief to allow ASX-listed companies to offer shares to existing
members under an SPP without a prospectus, subject to certain
conditions. The benefit of an SPP is that members are given the
right to acquire additional shares in the company at a discount to
the market price, and without brokerage fees or stamp duty.
In the latest class order, ASIC has made changes to the rules
about who can apply for the shares by extending the relief to the
a person that holds an Australian Financial Services Licence
with particular authorisations or conditions, or that is exempt
from holding an Australian Financial Services Licence in particular
a trustee of a self-managed superannuation fund or
superannuation master trust;
a responsible entity of an IDPS-like scheme; or
a registered holder who is noted on the register as holding the
shares on account of another person (such as a trustee).
There are additional conditions that need to be met to undertake
an SPP under ASIC policy, such as continuous disclosure
requirements. For more information on SPPs, the amendments to
ASIC's policy or the conditions that need to be met to rely on
the relief, please contact HopgoodGanim's Corporate Advisory
and Governance practice.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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