Reform of Employee Share Schemes

In the 2021-22 Budget, the Government announced changes to regulatory and tax arrangements for employee share schemes (ESS).

An ESS is frequently used by start-ups and viable but cash poor businesses to attract employees when the business would be unable to compete with the salary and wages offered by larger and more established businesses. These reforms will make it easier for businesses to offer an ESS and will support Australian businesses to attract and retain the talent they need to compete on the global stage.

An Exposure Draft Treasury Laws Amendment Bill was released for stakeholder submissions earlier in the year
The Explanatory Materials to the Exposure Draft say that part of the Government’s JobMaker Plan, the Government is committed to reducing red tape for business, supporting job creation and competitive remuneration, and incentivising employers and employees to work together to secure a strong and sustained post COVID economic recovery.

The regulatory reforms include:

  • completely removing Corporations Act 2001 (Cth) (Corporations Act) requirements for ESS offers to employees or directors who do not pay or incur debt to participate in these schemes;
  • if an ESS requires payment to contribute, a streamlined set of obligations under the Corporations Act will apply;
  • for ESS offers by unlisted companies, the value cap, under which Corporations Act requirements do not apply, increases from $5,000 to $30,000;
  • consolidating exemptions and class order relief from disclosure, licensing, hawking, advertising and other obligations under the Corporations Act;
  • relaxation of the requirements to lodge disclosure documents.

The Government has sought stakeholder views on the Exposure Draft legislation and explanatory materials to give effect to these reforms. The public consultation period has now closed and the results of submissions, and any amendments to the draft legislation are awaited.

For more information on the Exposure Draft, see:

The above news items are provided as general information in summary form of legislation and are not intended as legal advice.

Please contact us at McGuinnLegal if you would like further information or need specific advice in relation to any of these matters.