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 is "adequate security" for the ESOP repurchase obligation?

Adequate security refers to what the company must provide if it is paying people out in a lump sum by providing annual payments with interest. Adequate security cannot just be company stock; it must be something tangible, such as a hard asset, accounts payable, a letter of credit, money in the bank or a bond or other insurance.

Link to this FAQ Topic: Distributions & Repurchase