Last month, Treasury released an employee share schemes (ESS) consultation paper1 on proposed changes to simplify and expand the ESS regulatory framework to assist small businesses seeking to offer shares to their employees via an ESS. The release follows the Government’s initial announcement on 13 November 2018 of its intention to simplify and extend the current ESS regime2.
The consultation paper canvases the Government’s proposals to amend the current framework, which it describes as ‘complex and fragmented’ and ‘too restrictive’, and seeks feedback in relation to the proposals. The key proposals are summarised in the table below.
The proposals are primarily targeted at unlisted companies. However, feedback is also being sought on possible reforms to assist listed companies, including whether the current relief available to listed companies should be consolidated, simplified or expanded.
What are the key proposals?
What are the key takeaways?
The Government recognises that the current ESS regulatory framework is complex, fragmented and too restrictive, which may result in increased legal costs for companies and ultimately discourage some employers from offering an ESS.
The Government’s proposals are broadly to consolidate and simplify the regulatory framework to improve the ability of small businesses to offer ESSs to help attract, retain and motivate employees and grow their businesses.
Submissions on the consultation paper closed on 30 April 2019.
Disclaimer: The material contained in this publication is of a general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this publication we recommend that you seek professional advice. Please contact the authors if you have any queries about this article or topic.
Shaun Cartoon is a Partner with the Taxation team based in Melbourne. Shaun practices in corporate, international and employment taxes, with particular expertise in M&A and corporate transactions, employment taxes (including employee share schemes) and superannuation. Shaun also has significant experience in complex tax audits and disputes and has litigated significant tax cases through the Australian courts. Shaun is ranked in the Legal 500 Asia-Pacific as a Band 1 Next Generation Lawyer in Tax and was recognised as a ‘star’ advisor in employee share schemes by the Global Equity Organization. Shaun’s clients describe him as being “accessible” and having “a strong command of technical detail and the ability to apply this to complex situations in a pragmatic and commercial manner”. Shaun is Vice Chairman of the Tax Institute’s Breakfast Club Committee and also sits on the Tax Institute’s Superannuation and Employment Taxes technical committees. Prior to joining HWL Ebsworth, Shaun practised at top tier and magic circle law firms. Contact Shaun at email@example.com or connect via LinkedIn .
Partner Jamie Restas is the national head of the firm’s Commercial Group and is one of South Australia’s leading corporate lawyers. He has over 20 years’ experience in advising major listed and private corporations in connection with all aspects of corporate and commercial activities. Jamie’s expertise includes mergers and acquisitions (public company takeovers and schemes, private treaty acquisitions and joint venture investments), capital raisings (initial public offerings, rights issues, placements, share purchase plans, employee share plans and underwriting) and private equity/venture capital. In addition, Jamie regularly provides Corporations Act and ASX Listing Rule advice including in relation to related party transactions, corporate governance, directors’ duties, share capital reconstructions and continuous disclosure. Jamie has been named “Lawyer of the Year” for Corporate Law in Adelaide in Best LawyersTM Australia 2019 edition. He is also recognised in Best LawyersTM Australia for Agricultural Law, Commercial Law, Corporate/Governance Law, Equity Capital Markets Law, Mergers and Acquisitions Law, Private Equity Law and Venture Capital Law. Doyle’s Guide names Jamie as a “market leader” lawyer for Corporate & Commercial Law and as “pre-eminent” for Agricultural Law in South Australia. Contact Jamie at firstname.lastname@example.org or connect via LinkedIn .
Special Counsel Cam Steele specialises in companies and securities law as well as general commercial law. Cam has extensive experience in: mergers and acquisitions (with particular experience in private treaty acquisitions and divestments); equity capital raisings for both listed and unlisted public and private companies; and drafting and negotiating commercial contracts (in particular in relation to services, distribution and supply arrangements). Cam also regularly advises clients in relation to the Corporations Act and ASX Listing Rules (including in relation to fundraising activities, takeovers, employee incentive schemes and continuous disclosure obligations) and the Foreign Acquisitions and Takeovers Act. Cam works with clients across a range of industries, including energy and resources, information technology, agriculture, wine, health, manufacturing and government. Contact Cam at email@example.com or connect via LinkedIn .
1Employee Share Schemes, 3 April 2019, Consultations, Australian Government Treasury.
2Government proposes to double the value limit available under employee share schemes, 13 November 2018, Media Release, the Hon Josh Frydenberg MP, Treasurer, and Senator the Hon Michaelia Cash, Minister for Small and Family Business, Skills and Vocational Education. See our previous article, Proposed changes to employee share schemes for small business.
3ASIC Class Order 14/1000 and ASIC Class Order 14/1001, which apply to listed and unlisted companies, respectively.
4Section 9 of the Corporations Act.
5Referred to as ’employee incentive scheme’ under the ASIC Class Orders.
6Section 1274(2AA) of the Corporations Act.
7Referred to as ’employee incentive scheme’ under the ASIC Class Orders.