Facebook icon Twitter icon Forward icon

EOA Newsletter December 2014

Dear Subscriber,

Happy Christmas from Employee Ownership Australia, we hope everyone has a safe and enjoyable season.

Save the date

Our next Annual Conference date has now been finalised - 21 May followed by our awards evening.

There were some very significant and exciting changes in October that affectedthe rules for start-ups, listed companies and ASIC class orders prospectus exemptions for employee share plans. This coincided with lots of media coverage during the October and November period.

Industry News

No doubt everyone would have seen the announcement in Industry Innovation and Competitiveness Agenda which created a new start-up regime and also a reversal of 2009 legislation. Very encouraging the Prime Minister also made an announcement around this reform.

The Government is to be commended for this change. The previous legislation imposed barriers to broad based employee ownership within the Australian corporate community. The tax policy reflected in this announcement is long overdue and very welcome.

Start-Ups A New Regime Introduced

Options under certain conditions will have taxation deferred until sale. Shares (issued at a small discount up to 15%) will have that discount exempt from tax.

The eligibility criteria for start-up companies will include:
• aggregate turnover of not more than $50 million
• being unlisted
• being incorporated for less than 10 years.

There will also be ‘safe harbour’ valuation tables, used by companies to value their options to assist with reduction of costs.

EOA in conjunction with AusBiotech has offered to help with the implementation process and made the some initial suggestions as part of the consultation process.  This submission will be online in the New Year.

Listed Companies Reversal of 2009 Legislation

The proposed changes include reversing the changes made in 2009.  The information on this seems to suggest this may be limited to just the reversal of the taxing point for options.

The integrity provisions introduced in 2009 and the $1,000 up-front tax concession for employees (who earn less than $180,000 per year) will be retained.

Again EOA in conjunction with it listed Inner Circle Group has made submissions to help with the consultation process. This submission will be online in the New Year.

The Government also announced that the Treasurer will consult with industry to ensure that the draft legislation delivers the intended outcome. The changes are proposed to commence from 1 July 2015.

You can read the full announcement here.

ASIC Class Order Changes

Not long after the announcements ASIC released its updated Class Order exemptions from prospectus filing for employee share plans.

The New Class Order for Listed Entities

Some of the improvements include:

  • Removing the requirement to lodge offer documents with ASIC within 7 days of an offer being made. Now ASIC will only require a once-off reliance notice to be lodged with ASIC within a month after the first offers are made. Although, ASIC can require a person relying on the new class order to provide it with copies of offer documents if they request it.
  • The requirement to give the offer price at the date of the offer in the offer document is removed if is not calculated until later.  It is now OK just to provide a description of how it will be calculated.
  • Extending the Class Order to include performance rights in their most common form.
  • Allowing offers of 'phantom equity' and cash alternatives to be made under the Class Order.
  • Allowing offers to be made to contractors and casual employees (in line with the tax laws).
  • Confirming that offers to non-executive directors are permitted.
  • Facilitating offers of depositary interests.
  • Reducing the period for continuous listing to 3 months.
  • Reducing the 5% calculation to a rolling 3 year period.
  • Making more practical provisions for the contribution plan exemption (note: the definition is now much clearer).

ASIC has also imposed some new requirements:

  • In the offer document there is now a requirement to disclose general information about the risks of acquiring and holding securities;
  • The rules concerning trusts apply to most plans that operate through a trust.
  • There is a 5% limit on trust plans.
  • Loan plans can not have interest if they are to fall within the class order exemption.

You can read the class order and explanatory statement online.

Our New Board Members

Matthew Lever

Benjamin Morris

Phillip Muhlbauer

Norah Seddon


If you are interested you can find more detail about them from our webpage.


For our members we have added the following information on our member site:



On November 30 the Italian Government approved the Parliamentary Motion about the promotion of employee share ownership in Italy. Its aim is to promote employee share ownership through a new legislation and through a dedicated budget.


In October SEBI implemented some further changes to the stock options and employee share purchase plan provisions.

Media Coverage

The 3 details that could ruin start-up employee share option reforms
24 Nov 2014 | BRW

Changes to employee ownership rules may help Qantas to a brighter future
20 Oct 2014 | The Sydney Morning Herald

Abbott government innovation policy on right track for start-ups
17 Oct 2014 | Brisbane Times

Three ways the employee share policy could be better: health.com.au founder Andy Sheats
16 Oct 2014 | BRW

Start-ups welcome changes on employee share options
15 Oct 2014 | BRW

New rules for employee share schemes: a guide for start-ups
15 Oct 2014 | BRW

Start-ups welcome the return of ESOP tax breaks
15 Oct 2014 | The Sydney Morning Herald

Abbott confirms employee stock option scheme tax changes
14 Oct 2014 | The Australian

Tax breaks reintroduced for employee share schemes
14 Oct 2014 | The Australian

Tax sending Australian start-ups overseas: Atlassian
14 Oct 2014 | The Sydney Morning Herald

Lessons from the UK for our employee share scheme reforms
26 Sept 2014 | BRW

Getting Involved

If you are part of a large listed company or a SME/unlisted company and want to join our Inner Circle think thanks, we are accepting expressions of interest until the 31 January 2015.