find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Offering staff shares as incentives just got easier

Offering staff shares as incentives just got easier

priscilla-bryans

Listed companies will no longer have to 'jump through hoops' to give staff a stake in the business, a Herbert Smith Freehills partner has said.

Priscilla Bryans (pictured), partner in the Australian head office advisory team, said changes to Australian Securities & Investments Commission (ASIC) regulations will enable more companies to develop employee share schemes.

“It is important to give staff incentives and it is important to make staff owners of the business,” Ms Bryans said. “Our regulator, ASIC, has made it easier for companies to do that and I think they’ve done a great job.”

ASIC recently revised its class order that allows companies to issue shares to staff, senior executives and directors without needing to comply with certain regulatory provisions.

“The class order is fantastic because it means that all the regulatory provisions, all the hoops that you have to jump though when you offer shares to a stranger, don’t need to be jumped through when you are really just trying to offer shares to staff,” Ms Bryans said.

“Lawyers should be making sure their clients are ready to rely on the class order and have updated their legal documents.”

Ms Bryans, who spoke on this topic at the annual Employee Ownership Australia (EOA) Conference in Melbourne in May, said the revised class order comes at an important time. Parliament is considering new tax laws that attempt to reverse some of the changes to incentives made by the Labor government in 2009.

At that time the government responded to the global economic crisis by removing tax benefits in shares schemes, which were deemed to be driving greed and tax-avoidance behaviour. These changes later received criticism from the community and will be revised in legislation to be introduced from 1 July.

Ms Bryans said employee share ownership is a method for motivating staff beyond traditional cash bonuses.

“[Employee share schemes] help staff, as owners of the business, to feel invested in the future of the company,” she said.

“[They are] a very easy way for a company to provide a retention mechanism to keep staff and also to incentivise them over the long-term towards achieving a goal.”

The downside of an incentive scheme, according to Ms Bryans, is that the value of a share fluctuates. However, if shares are offered as a bonus on top of a salary, there is very little financial risk for the employee.

“[Also] if your staff don’t understand how the tax treatment works, they may get a nasty shock at tax time if they are not prepared for it.”

One of the key issues at the conference was the taxing point for executives on their incentive schemes when they leave a company. Currently, outgoing executives are up for tax upon departure, even if they may not be able to access gains from the assets for some years.

“We are hoping that the government will get on it,” said Ms Bryans. “The Productivity Commission actually recommended it when it did its 2009 review of executive remuneration in Australia.”

Slater and Gordon offers an employee share scheme, but most law firms are not publicly listed companies and therefore cannot provide these incentives.

Start-ups will benefit from a separate ASIC class order, which allows these businesses to offer shares to their staff even if they are not listed without having to comply to the Corporation Act provisions.

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Offering staff shares as incentives just got easier
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...