ASIC is seeking feedback on benefits and disadvantages of employee share schemes.
In its consultation paper 218, ASIC explains employee share schemes let employers offer shares to employees as part of an employee’s remuneration package.
They are generally designed to encourage staff retention and long-term interdependence by aligning the interests of employers and employees. Such schemes can provide tax advantages as well as the economic benefits generally associated with ownership interest.
ASICs Regulatory Guide 49 provides policy on this, but since it was released a number of cases do not fit within its boundaries, which is why the regulatory body is seeking submissions before updating it.
Difficulties ASIC has seen with the current scheme includes employers not being able to offer employees a range of financial products, such as performance rights that are not securities, or not being able to use trusts to hold shares in an employee pool.
There has also been confusion over how often employers must provide share scheme documents to ASIC.
Employee share schemes are also expected to have a name change – to employee incentive schemes. This was due to confusion over whether stapled securities can be offered and whether directors who receive a fee rather than a salary could receive offers.
ASIC would like your suggestions by 31 January, on alternative approaches, likely compliance costs, likely effect on competition and other benefits or complications.
By April the final class order should be drafted and by May the updated regulatory guide released.