ESS offers trigger a range of obligations under the Corporations Act, including in relation to disclosure, financial services licensing, advertising, hawking and the on-sale of financial products.
The Corporations Act provides exceptions from certain of those obligations for ESS offers and ASIC has also provided relief from those obligations for certain ESS offers through class orders (refer to ASIC CO 14/1000
for listed companies and ASIC CO 14/1001
for unlisted companies). The broad and fragmented nature of the regulatory regime currently applying to ESS and the limits to the relief provided under the class orders have often deterred or made it difficult for companies to offer ESS in Australia – particularly unlisted companies.
The Proposed Amendments should help demystify that regulatory regime and make it easier for companies to comply with the regime.
The Proposed Amendments significantly reduce the regulatory burden on companies (both listed and unlisted) that offer ESS interests “for free” compared to the existing ASIC class orders.
The Proposed Amendments also provide greater flexibility for companies (both listed and unlisted) where ESS offers require participants to pay monetary consideration although a number of conditions and restrictions, which are similar to those which apply under the existing ASIC class orders, will continue to apply.
Set out below is a table summarising the Proposed Amendments from a regulatory perspective.