ASIC Corporations (CG HoldCo Pty Ltd Employee Share Scheme Disclosure) Instrument 2023/354
I, Claire LaBouchardiere, delegate of the Australian Securities and Investments Commission, make the following notifiable instrument.
Date 10 May 2023
Claire LaBouchardiere
Contents
Part 1—Preliminary
1 Name of notifiable instrument
2 Commencement
3 Authority
4 Definitions
Part 2—Declaration
5 Modified disclosure of financial information for ESS offers made by new holding company
6 Where declaration applies
Part 3—Repeal
7 Repeal
Part 1—Preliminary
1 Name of notifiable instrument
This is the ASIC Corporations (CG HoldCo Pty Ltd Employee Share Scheme Disclosure) Instrument 2023/354.
2 Commencement
This instrument commences on the day after it is registered on the Federal Register of Legislation.
Note: The register may be accessed at www.legislation.gov.au.
3 Authority
This instrument is made under paragraph 1100ZK(2)(b) of Corporations Act 2001.
4 Definitions
In this instrument:
Act means the Corporations Act 2001.
Holdco means CG HoldCo Pty Ltd ACN 660 536 443.
Part 2—Declaration
5 Modified disclosure of financial information for ESS offers made by new holding company
Division 1A of Part 7.12 of the Act applies in relation to Holdco as if section 1100X (as notionally modified or varied by ASIC Corporations (Employee Share Schemes) Instrument 2022/1021) were modified or varied as follows:
(a) at the end of notional sub-subparagraph 1100X(2)(c)(ii)(B), omitting “.” and substituting “; or”;
(b) after notional subparagraph 1100X(2)(c)(ii), inserting:
“(iii) if the body corporate (first mentioned body) is the ultimate holding company of another body corporate (subsidiary) and the first mentioned body became the ultimate holding company of the subsidiary after the end of the most recent financial year of the first mentioned body:
(A) a balance sheet and profit and loss statement for the subsidiary for the most recent financial year prepared in compliance with the accounting standards; and
(B) a pro-forma consolidated balance sheet and profit and loss statement (together pro-forma financial information) drawn up for the first mentioned body in relation to the most recent financial year where the pro-forma financial information:
(I) explains the financial effect of the first mentioned body becoming the ultimate holding company of the subsidiary; and
(II) is prepared on a basis that is consistent with the accounting standards; and
(III) explains the basis of preparation and any key underlying assumptions; and
(IV) reflects any material transactions or events after the balance date where necessary to ensure the pro-forma financial information is not misleading.”.
6 Where declaration applies
The declaration in section 5 applies where Holdco:
(a) became the ultimate holding company of ConnellGriffin Pty Ltd ACN 162 085 593 on 1 August 2022; and
(b) makes offers of ESS interests in Holdco to ESS participants under Division 1A of Part 7.12 of the Act before 30 November 2023.
Part 3—Repeal
7 Repeal
This instrument is repealed at the start of 30 November 2023.
Overview
The ASIC Corporations (CG HoldCo Pty Ltd Employee Share Scheme Disclosure) Instrument 2023/354 was introduced to address a gap in financial disclosure requirements for employee share schemes offered by newly established holding companies. Enacted under the Corporations Act 2001 by Claire LaBouchardiere, a delegate of the Australian Securities and Investments Commission, the instrument aims to ensure that new holding companies provide clear and comprehensive financial information to employees participating in these schemes. This is particularly important when the holding company has recently acquired another entity and needs to disclose the financial impact of such acquisitions. The instrument modifies the existing disclosure requirements, specifying that a holding company must provide a balance sheet and profit and loss statement for the acquired subsidiary, along with pro-forma consolidated financial statements that explain the financial effects and assumptions of the acquisition. This legislative measure seeks to enhance transparency and protect the interests of employees involved in share schemes by ensuring they have access to relevant and accurate financial information.
Scope and Application
The ASIC Corporations (CG HoldCo Pty Ltd Employee Share Scheme Disclosure) Instrument 2023/354, effective from the day it is registered on the Federal Register of Legislation, pertains to CG HoldCo Pty Ltd, ACN 660 536 443, and is made under the authority of the Corporations Act 2001. This instrument modifies the disclosure requirements for financial information concerning Employee Share Scheme (ESS) offers made by CG HoldCo Pty Ltd as it became the ultimate holding company of ConnellGriffin Pty Ltd ACN 162 085 593 on 1 August 2022. The modifications apply to any ESS offers made by CG HoldCo Pty Ltd to ESS participants before 30 November 2023. The instrument specifies that for such offers, CG HoldCo Pty Ltd must provide a balance sheet and profit and loss statement for ConnellGriffin Pty Ltd prepared in compliance with accounting standards, along with pro-forma consolidated financial statements that reflect the financial effects of CG HoldCo Pty Ltd becoming the ultimate holding company, consistent with the accounting standards, and explaining the basis of preparation and any key assumptions. The instrument will cease to have effect from 30 November 2023.
Key Provisions
The ASIC Corporations (CG HoldCo Pty Ltd Employee Share Scheme Disclosure) Instrument 2023/354 (hereafter referred to as the Instrument) introduces specific disclosure requirements for CG HoldCo Pty Ltd (Holdco) concerning its Employee Share Scheme (ESS) offers. Under section 5 of the Instrument, Holdco must provide modified financial disclosures when making ESS offers to participants. This modified disclosure requirement applies when Holdco became the ultimate holding company of ConnellGriffin Pty Ltd (subsidiary) on 1 August 2022, and when it makes ESS offers to participants under Division 1A of Part 7.12 of the Corporations Act 2001 (Act) before 30 November 2023. The modifications to section 1100X of the Act require Holdco to provide a balance sheet and profit and loss statement for the subsidiary for the most recent financial year, as well as pro-forma consolidated balance sheet and profit and loss statements that explain the financial effects of Holdco becoming the ultimate holding company of the subsidiary.
Holdco, as the ultimate holding company, must ensure that the pro-forma financial information is prepared in compliance with accounting standards, is consistent with those standards, and explains the basis of preparation and any key underlying assumptions. This information is intended to provide a clear understanding of the financial implications of Holdco’s new status as the ultimate holding company of the subsidiary. Furthermore, the pro-forma financial information must reflect any material transactions or events that may have occurred after the balance date, ensuring the information is not misleading. The obligations outlined in the Instrument require Holdco to furnish accurate and comprehensive financial disclosures to comply with regulatory requirements and to ensure transparency for ESS participants.
Failure to comply with the requirements set out in the Instrument may result in legal consequences. While the Instrument itself does not explicitly outline specific offences or penalties, non-compliance with the disclosure obligations under the Corporations Act 2001 could result in legal action against Holdco. Potential consequences may include civil penalties for misleading or deceptive conduct, enforcement actions by the Australian Securities and Investments Commission (ASIC), and potential criminal penalties for directors or officers found to be in breach of their statutory duties. The maximum penalties for such offences can vary, with civil penalties potentially reaching up to $2.7 million for corporations under the Act, and criminal penalties including fines and imprisonment for individuals depending on the severity of the offence.