Federal Support for Employee Ownership Transitions and Worker Cooperatives
This Act establishes a new federal facility to provide up to $5 billion annually in loan guarantees to specialized investment firms. The goal is to finance transactions that result in employees (through Employee Stock Ownership Plans or worker cooperatives) gaining majority ownership of their companies. This aims to boost worker wealth accumulation and participation in business success while ensuring strong protections during the ownership transition process.
Key points
Employee Ownership Fund: Creates a $5 billion annual loan guarantee facility to finance the sale of businesses to Employee Stock Ownership Plans (ESOPs) or worker cooperatives, ensuring employees gain majority control.
Worker Protection: Mandates the appointment of an independent trustee and a fairness opinion for ESOP transactions to ensure the price and terms are financially fair to the employees' plan.
Prohibition on Personal Financing: Employees are explicitly protected from having to personally finance the ownership transition through wage concessions or rolling over their personal retirement funds.
Fair Sale Proceeds: Requires that if the employee-owned company is later sold, the proceeds from the ESOP shares are distributed fairly among participants, protecting both allocated and unallocated shares.
Status:
Introduced
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