Nicole Radice, Partner
The Australian Securities and Investment Commission (ASIC) released its updated policy on Share Purchase Plans (SPPs) this week with Class Order 10/105 and the updated Regulatory Guide 125. The policy widens the ability of those who hold securities as custodians or trustees to participate in SPPs, rectifying what had been considered as deficiencies in the relief in the previous policy. The new policy also confirms that applicants are able to use electronic payment facilities.
ASIC introduced changes to the policy relating to SPPs in June 2009, increasing the investment limit from $5,000 to $15,000 per registered holder in an attempt to encourage more participation by retail investors. The 2009 changes also aimed to enable custodian holders to participate in SPPs. However, it has become apparent since that time that there were some problems with the policy due to the restrictions on the definition of 'custodian'.
An SPP is a plan offered to existing shareholders by a company listed on the Australian Securities Exchange (ASX). ASIC has given relief to allow ASX-listed companies to offer shares to existing members under an SPP without a prospectus, subject to certain conditions. The benefit of an SPP is that members are given the right to acquire additional shares in the company at a discount to the market price, and without brokerage fees or stamp duty.
In the latest class order, ASIC has made changes to the rules about who can apply for the shares by extending the relief to the following custodians:
- a person that holds an Australian Financial Services Licence with particular authorisations or conditions, or that is exempt from holding an Australian Financial Services Licence in particular circumstances;
- a trustee of a self-managed superannuation fund or superannuation master trust;
- a responsible entity of an IDPS-like scheme; or
- a registered holder who is noted on the register as holding the shares on account of another person (such as a trustee).
There are additional conditions that need to be met to undertake an SPP under ASIC policy, such as continuous disclosure requirements. For more information on SPPs, the amendments to ASIC's policy or the conditions that need to be met to rely on the relief, please contact HopgoodGanim's Corporate Advisory and Governance practice.
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