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EFES NEWSLETTER - SEPTEMBER 2022
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Employee
share ownership, what is it?
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Employee
share ownership, what is it? Employee share ownership
is when employees hold a stake in the capital of the
company that employs them. It starts with one employee
holding one share and can extend up to 100% held by
all employees.
A small number of model employee share ownership plans
exist around the world (but with many variations depending
on the specific legislation of each country). These
plans are more or less adapted to startups (or micro-enterprises)
or to SMEs or large companies.
Like corporate ownership in general, employee share
ownership plans can be divided into two main categories,
individual direct and collective indirect share ownership:
Direct individual employee share ownership is the most
traditional and familiar form.. To achieve this, the
employee uses part of his or her savings or financial
resources to buy shares in the company, thus assuming
a personal risk. This is possible under various types
of plans. This category of employee share ownership
plans is virtually the only one of its kind in continental
Europe.
Indirect collective employee ownership is very little
practised in Europe (except in the UK). This explains
why employee share ownership in Europe is almost non-existent
in SMEs, and why it is almost unknown outside large
companies. Indeed, SMEs generally avoid increasing their
shareholder numbers, whether or not they are employees.
They are only forced into it when they become larger.
On the other hand, one particular phase may trigger
a desire for new shareholders: Business transmission.
That is why this is the best time to introduce employee
ownership in SMEs. Indirect collective ownership is
the most suitable form for transferring a company to
employees. Plans within this category (ESOP, EOT) have
been designed for this purpose. They allow employees
to acquire ownership of their company, often 100%, without
having to use up their savings or personal finances,
and therefore without personal risk.
Indirect collective employee ownership plans (ESOPs,
EOTs) facilitate the transfer of companies to employees,
which direct individual share ownership schemes can
only achieve with great difficulty and expense, as employee
savings are usually not up to the task.
More information
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Press
review
We
have a selection of 18 remarkable articles in 5 countries
in August 2022: Czech
Republic, France, Italy, UK, USA.
Czech Republic: Legislation to promote employee share
ownership in the Czech Republic? The debate has begun.
France: Samse Group is an emblematic company for employee
share ownership in France. First international employee share
plan for Rémy-Cointreau. New employee share plans for Axa,
for Elis. Transmission failed for the 90 employees of Acropole.
Italy: Employee share ownership in Italy: different
cases and multiple opportunities.
UK: Every day a new SME is transferred to employees.
This month, among others, the cases of: Concepto Diagnostics,
BCMS, Minehead Medical Centre, Getech, Turnaround Publisher
Services. The Welsh Government is committed to doubling the
number of employee-owned businesses by 2026.
USA: In their new book, "Ownership: Reinventing
Companies, Capitalism, and Who Owns What", Corey
Rosen and John Case make the argument that capitalism is broken.
Wealth has concentrated while wealth insecurity has soared.
Public companies are focused almost solely on the short term,
while private equity firms focus on buying and flipping firms
in just a few years. Yet there is another model that eliminates
that problems entirely: Employee ownership.
A recent study finds that workers at private companies owned
by employee stock ownership plans place a higher priority
on their company's commitment to corporate social responsibility
than employees at non-ESOP companies. Business transfers in
the form of ESOP plans for Mower Agency and for A to Z Machine.
The full press review is available
on:
http://www.efesonline.org/PRESS
REVIEW/2022/August.htm
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A
political roadmap for employee ownership in Europe
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