For years, NZ tech companies and their employees have been held back by NZ’s securities laws governing private company employee share schemes.
Overseas high growth technology hubs are fueled by a high level of employee equity participation, usually in the form of generous option schemes. Yet in New Zealand, it’s illegal to offer these schemes to employees unless a company is willing and able to comply with the FMA’s burdensome and, frankly, paternalistic exemption notice (which few are).
Adopting the recommendation of the Capital Markets Taskforce, the Financial Markets Conduct Bill contains an exemption for employee share schemes that will bring our securities laws into line with US share scheme rules. We think the new exemption will do more to accelerate the development of the NZ tech sector than any other Government initiative under contemplation.
Unfortunately, the start date of the Bill has been pushed back to at least April 2014 due to the complexity of re-writing the rules governing retail financial markets.
Whilst it is critically important to get the rules for retail financial markets right, this doesn’t need to hold up the introduction of the new employee share scheme exemption (because the whole point of this exemption is to take share schemes outside retail investor disclosure rules).
We have therefore proposed to Minister Foss that the employee share scheme exemption be fast tracked.
This is a great opportunity for the Government to provide a major benefit to the tech sector with minimal effort and cost. The sooner the exemption is introduced, the sooner the benefits will flow to NZ tech companies, their employees and to the economy as a whole. Let’s get cracking!
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