The ASX appears to have relaxed its previous robust stance on board directors exercising discretion to waive or vary the performance hurdles of equity grants. We explained (see HERE) that the ASX considered LR 6.23.3 prohibited any change to a performance hurdle or other terms that would make it easier for options or share rights to vest. This meant that, notwithstanding plan rules and offer letters providing discretion to the board, the LR prohibited the exercise of that discretion.

In its Compliance Update 09/23 released in December 2023, the ASX said it would consider a waiver of LR6.23.3 under certain conditions and provided the company got shareholder approval for the variation of terms.

The ASX’s latest Compliance Update 02/26 released on 9 April advises of a less strict approach. The ASX says a number of companies have approached it for waivers of the LR in circumstances where it considers waivers are not required.

This Compliance Update seeks to clarify when a waiver of LR 6.23.3 is not required.

Here is the clarification: an entity does not require a waiver of LR 6.23.3 to:

• Exercise a specific discretion under its employee incentive scheme; or
• Exercise a discretion specified in the terms of the offer.

The ASX view is that normal commercial practice for incentive options or rights to include discretions permitting the board to vest or claw back the options or rights or make other adjustments in certain defined circumstances. This might include a change of control, cessation of employment, or a performance condition that clearly and expressly contemplates the Board having discretion to modify vesting outcomes when the conditions are tested.

On the other hand, the ASX still considers LR 6.23.3 prohibits the exercise of a general discretion to amend or waive the conditions or terms of options or share rights (or to amend the plan rules).

So, what should you now do?

Key actions arising from this latest ASX view include:

• A waiver, and hence shareholder approval, is still required if the board intends to vary the terms to enable vesting where it would not otherwise, and the board is relying on the broad general discretion typically evident in most plan rules and offer letters.
• A waiver is not required if the variation of terms is based on a discretion attaching to defined circumstances like change of control, cessation of employment, or a performance hurdle that contemplates a variation.
• Ensure future offer letters are more specific around each time the board may be required to exercise its discretion.

HERE is the Compliance Update 02/26.

© Guerdon Associates 2026 Back to all articles