On 3 April 2019, Treasury released a consultation paper seeking formal feedback on its proposed changes to the employee share scheme rules flagged in November 2018.
The consultation paper outlines Treasury’s proposal to simplify and expand the current regulatory exemptions for employee share schemes.
In summary, Treasury proposes to:
- consolidate and simplify the existing exemptions (which currently sit in both the Corporations Act 2001 (Cth) and separately in specific class order relief instruments) with respect to disclosure, licensing, hawking, advertising and onsale directly in the Corporations Act 2001 (Cth);
- increase the value limit for unlisted companies offering financial products from $5,000 per employee to $10,000 per employee in any 12 month period;
- allow unlisted companies to offer employees contribution plans within the exemptions; and
- provide small companies which will not otherwise be entitled to rely on the exemptions and consequently need to lodge a disclosure document, the ability to avoid publicly disclosing commercially sensitive financial information unless they are otherwise obligated to do so.
Whilst the proposals set out in the consultation paper are welcome, in particular consolidation of the currently complex relief instruments directly into the Corporations Act 2001, there are still significant limitations on unlisted companies that seek to implement broader based employee share schemes without the need for a potentially time-consuming and costly disclosure document. The proposals included in this consultation paper go only some of the way to address the limitations.
In the interim, McCullough Robertson will continue to monitor and provide updates but please feel free to reach out to our team to discuss how we can assist with you.
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