Corporate Finance Update - Issue 21

Issue 21, February 2025

ASIC invites feedback on proposed remake of employee incentive scheme instruments

ASIC is seeking feedback on a proposal to remake two employee incentive scheme (EIS) class orders due to expire on 1 April 2025:

• Class Order [CO 14/1000] Employee incentive schemes: Listed bodies, and
• Class Order [CO 14/1001] Employee incentive schemes: Unlisted bodies.

ASIC plans to combine the two class orders into one legislative instrument and proposes to remake the exemptions for a period of five years.

Entities have not been able to make offers of financial products to employees and other eligible participants under the EIS class orders since 1 March 2023. Employee share schemes are now operated under Division 1A of Part 7.12 of the Corporations Act 2001.

However, entities may need to continue issuing financial products because of employee incentive schemes established under the EIS class orders. For example, this may occur when an eligible participant becomes entitled to shares when they exercise an option or an incentive right vests.

The class orders currently contain exemptions that support the continued issue of financial products, including relief for secondary sales, advertising, licensing and contribution plans: ASIC Corporations (Amendment) Instrument 2022/1022.

While the exemptions will largely remain on the same terms, ASIC proposes some exemptions should only be required for ‘underlying eligible products’, such as shares, because entities should not need to issue ‘overlying eligible products’, such as options or incentive rights.

Submissions should be sent by 5pm AEDT on Friday, 22 February 2025 to rri.consultation@asic.gov.au.

For more information, see CS 14 Proposed remake of relief for employee incentive schemes.

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ASIC invites feedback on proposed remake of offers of CHESS depository interests instrument

ASIC is seeking feedback on a proposal to remake Class Order [CO 14/827] Offers of CHESS Depository Interests, which is due to expire on 1 April 2025.

Our approach to regulating offers of CHESS Depository Interests (CDIs) involves ‘looking through’ the CDI to the underlying foreign security, so that offers of CDIs are regulated under the Corporations Act in the same way that offers of the underlying foreign securities would be regulated.

ASIC proposes to remake the class order on largely the same terms, for a period of five years.

Changes include minor revisions to the definition of 'depository interests' and the wording of the Australian financial services (AFS) licence exemption. These changes are intended to improve clarity, not change the operation of the relief.

Note: ASIC has received an application from an entity to be included in the definition of ‘approved financial market’. If ASIC approves that application (or any other similar application), it may take steps to update the definition.

Submissions should be sent by 5pm AEDT on Friday 28 February 2025 to rri.consultation@asic.gov.au.

For more information, see CS 15 Proposed remake of relief for offers of CHESS Depository Interests.

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