The Financial Markets Conduct Act 2013 (FMCA) overhauled the rules relating to securities and financial markets and introduced a new regime for offers of financial products.  Understanding the disclosure requirements is important for businesses offering investments and raising capital.

Please click here to see further information about the FMCA disclosure requirements and other FMCA disclosure exclusions.
 

Benefits of offering an employee share scheme

The availability of this exclusion makes it easier for a company to implement an employee share of purchase scheme and businesses should consider taking advantage of these new rules to incentivise and retain key employee.

Benefits of employees share purchase and schemes include:

• attracting and retaining key staff members
• implementing a succession plan; and
• rewarding employee performance without impacting on the company cash flow or working capital position.

Employee share purchase scheme exclusion

Disclosure under the FMCA is not required if an offer for financial products is made under a qualifying employee share purchase scheme.  An employee share purchase scheme is essentially any arrangement under which employees or directors may acquire shares issued by the business.

An eligible person is an employee or director of the offeror or any of its subsidiaries and includes other persons who are providing personal services principally to the offeror or any of its subsidiaries (such as contractors).  The exclusion also extends to any entity under the eligible person’s control.

The flow chart below shows the conditions required for an offer to qualify for the exclusion:

Remaining obligations

Disclaimer: This article is a general summary of complex laws and regulations that contain severe sanctions for breach and is not intended as legal advice.  Specific legal advice should be obtained in relation to proposed marketing, offering or selling of financial products.

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