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The Employee Ownership Update

Corey Rosen

March 6, 1995

(Corey Rosen)

Progress in Poland

According to Karol Szadurski, head of UNIA, the Polish employee ownership support organization, there are now over 1,000 companies in Poland with broad employee ownership. Karol's fax to us did not indicate what percentage of these were majority employee owned. Karol says this represents 31% of the privatized firms. Employee ownership has not been favored by the Polish Government, but has been a common way to privatize firms almost by default when other approaches fail.

New Census Bureau Study Shows Participation Programs Limited

The rhetoric about employee participation appears to have far outraced the reality. In a survey of plant and site managers at companies with more than 20 employees, only 18% report even having experimented with employee work teams.

Manitoba Fund Creates Canadian ESOP

In a few Canadian provinces, employees are able to get both provincial and federal tax credits for buying employer stock. They can also get credits for investing in labor venture capital funds that invest in local companies. In Manitoba, Sherman Kreiner, who formerly headed PACE, a Philadelphia based worker ownership support group, now heads Crocus, a Manitoba labor venture capital fund. Sherman has devised a way to create an ESOP like structure using Canadian law. For more information, contact Crocus at 204-925-2400.

Starbucks One of Five Business Enterprise Trust Winners

For the third consecutive year, an employee ownership company and NCEO member has been named one of the five recipients of the Business Enterprise Trust Award. The award recognizes excellence in balancing free enterprise objectives with socially responsible actions. Previous winners included Cooperative Home Health Care and Springfield Remanufacturing.

Legal Tip: Remember Attribution Rules

In determining whether an ESOP allocation is allowed, don't forget to consider attribution rules. Spouses and dependent children, and possibly others, can have their income attributed to another individual. The spouse of a 25% shareholder cannot receive an allocation subject to a 1042 rollover, for instance. A husband and wife working together at a company would have their incomes added for purposes of the $150,000 allocation limit.

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