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How will this work in practice?

ABC Pty Ltd is a startup that wishes to attract the best programmers by offering them an opportunity to share in its success through an employee share scheme.

The company proposes to issue more than $5,000 per person per year, which means they are not eligible for existing ASIC disclosure relief.

Scenario under existing law

ABC must lodge disclosure documents with ASIC, with the documents then becoming publicly available. A competitor is able to determine that ABC is not in the financial position to respond if it engages in a sustained period of discounting and raised marketing expenditure. ABC loses the race to become the primary app in their market and fails to reach profitability.

Scenario after new measures introduced

ABC’s financials are not disclosed and competitors do not respond accordingly. ABC’s app gains greater market share and the firm becomes profitable.