Australian organisations that are subsidiaries of overseas companies are able to provide their employees with the employee share plan benefits available under Australian law.
Employee Share Plans , such as the Exempt Employee Share Plan can be structured such that the parent company involvement is not required. Subsidiaries of companies that are listed on an Approved Foreign Market are able to access these Australian taxation benefits. Authorisation from the parent company to enable the provision of the employee share plan benefits is not necessary, unless required for internal management purposes or the parent company’s domicile requirements.
The Exempt Employee Share Plan can be structured as a “trust based plan” using a trust to hold the shares in the parent and providing employees with the beneficial ownership of the shares. All shares required for the employee share plans can be purchased on the parent company’s domiciled exchange. The use of the trust results in only one addition to the parent share register and the trust can enforce any restrictions on the trading of the shares without involving the parent company registry.
As the number of employees within the subsidiary organisation become shareholders increases, the subsidiary organisation benefits from the increased knowledge of the parent company and the generally recognised benefits of employee ownership (increased productivity, better corporate knowledge and increased sales and service levels).
For executives loan based share plans could also provide a suitable long term incentive for executives within the subsidiary.
Should you wish to discuss any aspect of employee equity ownership in overseas subsidiary companies, or employee equity ownership in general, please contact OTA.