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13-310MR ASIC to update its employee share scheme policy and class order

Thursday 14 November 2013

ASIC has today released a consultation paper on employee incentive schemes.

Key points:
  • ASIC is reducing business costs by widening our relief to better facilitate employee incentives schemes
  • Employee incentive schemes are an important tool for companies to retain staff, and a way for employees to share in the success of their company

ASIC Commissioner John Price said, ‘The objective of this consultation paper is to put forward proposals that further reduce business costs, and enhance the efficiency and development of the economy, while at the same time ensuring that participants of employee incentive schemes remain confident and informed about what they are being offered.’

Employee incentive schemes are designed to encourage retention and long term interdependence between employers and employees. They are structured to align the economic interests of both parties and many do this by offering an ownership interest in the company, or a financial return linked to the performance and success of the company.

In light of various legislative changes and market developments, we have taken this opportunity to revisit our policy settings and the scope of our class order relief.

ASIC’s specific revisions and new policy proposals include:

ASIC has previously published Class Order [CO 03/184] Employee share schemes and Regulatory Guide 49 Employee share schemes (RG 49) and intends to retain its fundamental policy settings for granting employee incentive scheme relief by ensuring that:

Commissioner Price said, ‘Given the technical nature and complexity of the relief, we have prepared a detailed consultation paper to assist participants in providing their feedback. Our expectation is that this consultation paper will enable participants to efficiently engage with the proposals so that we can move to finalising our revised regulatory guide and new class order in the first half of 2014.’

Submissions close 31 January 2014.

Consultation Paper 218 Employee incentive schemes (and the attached draft Regulatory Guide 49 Employee incentive schemes)
Current RG 49
[CO 03/184]


Since issuing [CO 03/184], a large number of Australian and overseas issuer-employers have relied on this class order to offer their shares and options to their Australian resident employees. We have also provided an increasing number of case-by-case relief in situations not covered by the class order where they are otherwise able to meet our policy settings.

ASIC has reviewed the structure of employee incentive schemes and this has highlighted a number of areas that may need to be addressed to ensure the law continues to respond successfully to market developments, including the types of financial products which may be offered, the structures being used and those who may be eligible to participate.

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