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

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

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

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

Developments in Equity Based Strategies in Asia Pacific Singapore: “Entrepreneurial ESOP Scheme” Options granted on or after 1 June % 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

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

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. 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 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

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 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