Financial Markets Conduct Act 2013, Employee Share Option Scheme Exclusion
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.
Set out below is an overview of the “employee share purchase scheme” exclusion.
It is important to note that even if an offer is made in reliance on an exclusion, the FMCA may still impose short-form disclosure, warning statements or other requirements on the offeror.
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:
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:
Offerors who rely on the employee share purchase scheme exclusion will still need to provide the following documents to the investor:
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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