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)

What constitutes "publicly traded" for the ESOP repurchase obligation?

The ESOP Fairness Act of 2022 changed the definition of publicly traded for ESOP companies so that the roughly 800 companies traded on the OTCQX Best Market and OTCQB Venture Market are no longer required to have an outside independent appraisal to determine their share value. In the past, these companies were deemed insufficiently traded to establish a reliable price. The bill primarily aids community banks, where ESOPs are very common. These banks are generally too small, and lack the trading volume, to trade on major exchanges. Stocks that are quoted only in the Pink Sheets or in the OTCBB will not be treated as publicly traded, even if there is a relatively liquid market for the stock.

Link to this FAQ Topic: Distributions & Repurchase