GLOBAL EQUITY ORGANISATION EMPLOYEE BENEFIT PLANS UPDATE

1. GLOBAL EQUITY ORGANISATIONEMPLOYEE BENEFIT PLANS UPDATE Presenter: Jeffrey Lees Director Geo (Asia Pacific) Tax Partner, Dibbs Crowther & Osborne Date: 30 November 2000

2. Introduction • Four Main Remuneration Strategies • Why Introduce an Equity Based Plan? • Developments in Asia Pacific Countries • Overview of Tax Compliance Issues • GEO Website

3. Remuneration Strategies • Salary & wages & bonuses – cash benefits • Fringe benefits • Superannuation – retirement savings • Equity based incentives

4. Why Introduce an Equity Based Strategy? • Align interests of employer with general employees • Assist with a change in culture/work ethic • Provide a platform for improved productivity • Supplement net national retirement savings • Assist employee buyouts & succession planning for small business • Facilitate development of small medium and unlisted sector

5. Developments in Equity Based Strategies in Asia Pacific • Singapore: “Entrepreneurial ESOP Scheme” • Options granted on or after 1 June 2000 • 50% tax exemption on option gains of up to S$10M in 10 yr period • Subject to conditions – both 50% tax exemption + 5 year deferral on tax payment on balance of 50% gain • Eligible to only Singapore incorporated companies – with M.V. of gross Assets <S$100M • Eligible to employees working at least 30 hrs/week and <25% of voting shares • Vesting of options restricted: • 1 yr from grant if exercise price = share value • 2 yrs from grant if exercise price <share value

6. Developments in Equity Based Strategies in Asia Pacific Malaysia: “Simplification of Securities Regulation” • After 1 July 2000 Securities Commission approval required to issue any shares or options • Exception for shares/options of foreign incorporated co. • SC approval is given if: • Aggregate number of options/shares must be < 10% issued capital • Max number of shares or options per employee must be <500,000 • Eligibility & allocation must be equitable amongst different categories of employees • Exercise price of options in unlisted company can be at a discount to M.V. of share • Exercise price of options in listed Company must not be <M.V. of share

7. Developments in Equity Based Strategies in Asia Pacific (cont’d) Malaysia (cont’d): • Foreign full-time contract employees can participate subject to limit of 20% exercise of options in any year • Plan has a 5 yr time limit – subsequent renewal subject to SC approval. • Unlisted Company generally not encouraged to seek approval of SC to list within 1 yr of introducing any share/option plan • Existing options in unlisted Company must be exercised or cancelled before approval of SC to list.

8. Developments in Equity Based Strategies in Asia Pacific (cont’d) Indonesia: “Securities, Regulation in Limbo” • “Public offerings” require prospectus filings • Public offering required if total “value” of shares/options >R$1billion and • Offered through mass media; or • Offered to >100 people; or • Results in purchase of securities by >50 people • Use of “co-operative association” = 1 person • Public offering of options in foreign companies may require custodian bbank and listing of Indonesian depository receipts • BAPEPAM acknowledge law is inappropriate

9. Developments in Equity Based Strategies in Asia Pacific (cont’d) • New Zealand: “Interest free loan plans” • Approval required – strict conditions • Fully paid shares acquired with interest free loan • Shares can be offered at a discount • Employee cannot deal with share for min. 3yrs, max. 5yrs • Limit of NZ$2,340 value of shares per employee in any 3yr period • Advantages: • Employer gets deduction for notional 10% interest • Employee not assessed on loan or discount • Suitable with high turnover of staff • No Prospectus required

10. Developments in Equity Based Strategies in Asia Pacific (cont’d) • New Zealand: “Interest Free Loan Plans” (cont’d) • Disadvantages: • Participation must be all fulltime employees • Limited value can be given • Discount share/option purchase plan • No approval required • Employee taxed on discount given – only at time share acquired (option exercised) • Advantages: • Participation can be selective • No limit on value of options/shares • Restrictions can be imposed on employee • Discount up to 33% can be exempt • Disadvantages: • No deferral of taxing point beyond acquisition • 8yr restriction required for exemption on discount • Prospectus required unless exempted

11. Developments in Equity Based Strategies in Asia Pacific (cont’d) Australia: “Trends” • Share Options: • becoming subject to performance hurdles • Use of interest free loans for exercise is popular • Fully paid shares given on performance or tenure • Salary sacrifice now more attractive on share purchase plan – future CGT discount available • Electing to be taxed up front on options does not qualify the share acquired on exercise for CGT discount • Deferal of annual cash bonus paid in free shares • Share ownership guidelines for executives • SAR agreements for annual bonuses