EOG Achievements
The Employee Ownership Group (EOG) has notched up important achievements.
Defining the goal
First, we have defined the goal at which ESOP law and regulation should aim:
- to share the ownership of Australian businesses with the people who work in them – and this in way that is both widespread across the workforce and deeply embedded in the capital structures of companies whatever their size and kind.
Setting the course
Secondly, we have identified the pitfalls in our present legal framework for ESOPs, and understood why it bars the way to a major expansion of employee ownership.
Defining (and costing) the solution
Thirdly, we have defined the reforms called for by the goal we have set, and we have costed the impact of these on the Federal budget and national income.
Advance to the objective
And, finally, we have begun to achieve practical reforms to the present system of employee ownership.
Stapled securities - 2006
On Federal Budget night 2006 we accomplished part of one of our major objectives.
The Government announced it had agreed to
"extend the employee share scheme and related capital gains tax provisions to stapled securities that include an ordinary share and are listed on the Australian Stock Exchange, with effect from 1 July 2006." ( Budget Measures 2006-07 Budget Paper No. 2, p.18)
This is a significant move. It provides a greater flexibility within the present tax arrangements for ESOPs and has meant that tens of thousands of employees who could not benefit from a share plan can now do so.
Simpler regulatory provisions – 2007
In May 2007 the Federal Government introduced a Simpler Regulatory System Bill. Among other things, the Bill addressed a range of technical obstacles and inefficiencies confronted by companies proposing to implement share plans.
These included matters related to:
- Offer Information Statements;
- Prohibitions against hawking securities; and
- Financial Services licensing requirements.
Of these the most important was an exemption for "eligible employee share schemes" from onerous Financial Services licensing provisions.
Summary
The stapled securities reform and relief on the regulatory front came as a result of representations made by the Employee Ownership Group to the Federal Government and Treasury officials.
While we have movement by Government and its advisers in the right direction, Australia’s political leadership is still a long way from grasping the virtue of employee ownership and from decisive action to promote it.