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The legislative support will remove unintended technical issues preventing the use of schemes, says ASIC.
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ASIC provides relief to employee share scheme providers
23 December 2022
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ASIC has provided relief to those looking to implement employee share schemes (ESS) with a legislative instrument that strives to remove technical obstacles to putting schemes into practice.
The instrument includes a modification to section 1100T of the Corporations Act 2001 so that it refers to the term contributions rather than payments and deductions, to cater for salary sacrifice arrangements.
ASIC said it also clarified that the contributions of more than one ESS participant could be held in the same account so users did not need to create a separate account with an Australian authorised deposit-taking institution for each.
ASIC said the ASIC Corporations (Employment Share Schemes) Instrument 2022/1021 provisions applicable to part 7.12 of the Corporations Act would provide:
- A broader exemption for secondary sales of financial products that are quoted on a financial market.
- More options for the financial information that foreign companies can provide to ESS participants.
- The ability to provide an expert valuation of ESS interests that are not ordinary shares.
- Technical relief so that salary sacrificing arrangements can comply with the requirements for contribution plans.
- Clarification that financial products offered outside this jurisdiction do not need to be included when calculating the issue cap in s1100V.
The implementation comes after ASIC received discourse on the topic in consultation paper 364 “Modifications to the ESS regime”, which it said it received 13 responses, and that it would publish a report on the submissions in early 2023.
ASIC said that it had designed the legislative instrument to replace the existing relief, Class Order 14/1000 Employee Incentive Schemes: Listed bodies, and Class Order 14/1001 Employee Incentive Schemes: Unlisted bodies.
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ASIC said the ESS provisions commenced on 1 October 2022.
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