ASX has revised its approach to how issues to directors (or their associates) approved under Listing Rule 10.14 are treated for the purposes of Listing Rule 7.2 (Exception 13).

Background

Listing Rule 7.2 (Exception 13) allows a listed entity to obtain securityholder approval for issues of equity securities under an employee incentive scheme, so that issues made in accordance with that approval do not reduce the entity’s available placement capacity under Listing Rule 7.1.

To rely on Exception 13, the notice of meeting must include prescribed information, including the maximum number of equity securities proposed to be issued under the scheme.  Entities seeking admission may instead include the required information in their prospectus, PDS or information memorandum and rely on the exception.

Where incentive securities are to be issued to directors (or their associates), separate securityholder approval is required under Listing Rule 10.14.

ASX’s revised position

ASX’s position had previously been that securities issued pursuant to a Listing Rule 10.14 approval also counted towards the “maximum number” approved under Listing Rule 7.2 (Exception 13).  In practice, this meant entities needed to set a maximum number that contemplated incentive securities to be issued to both director and non-director participants over the relevant three-year period.

In ASX’s Compliance Update dated 19 December 2025, ASX announced it has reviewed that approach and decided to revise its position, recognising that it may not have been obvious that issues approved under Listing Rule 10.14 should also be counted towards the Exception 13 maximum given securityholders separately approve those issues.

Under the revised approach, securities issued with approval under Listing Rule 10.14 will no longer count towards the maximum number of securities that can be issued under an employee incentive scheme approved under Listing Rule 7.2 (Exception 13).

What this means in practice

When setting the maximum cap for the next three years under Listing Rule 7.2 (Exception 13), entities need only consider proposed issues to non-director participants under the scheme.

This change should preserve the “headroom” available under an Exception 13 approval, because director/associate grants approved under Listing Rule 10.14 will no longer be counted towards the scheme’s approved maximum under Exception 13.

ASX’s Compliance Update can be accessed here