Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

How does governance work in an Employee Ownership Trust?

Employee ownership trust (EOT) companies have boards of directors just like other companies. There are no specific rules on how the board must be constituted or what it should do other than what state corporate law requires. EOTs also have a trustee who represents the interest of the trust and often a "trust protector" whose sole duty is to make sure the purpose of the trust (such as not being sold) is carried out.

Many employee ownership trust companies provide a role for employees in governance, but this is not a requirement.

For more details, see Using an Employee Ownership Trust for Business Transition.

Link to this FAQ Topic: Employee Ownership Trusts (EOTs)