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Employee Ownership Trusts Across Four Continents
A quick overview of the development of employee ownership trusts in the UK, US, Canada, Australia, and Uganda
In brief: Employee ownership trusts are a type of purpose trust in which a trust owns a company for the benefit of employees. They are widespread in the UK, building steam in the United States, and on the horizon in Australia, Canada, and Uganda. In continental Europe, they are part of the broader steward ownership movement.
Where it stared: In 2014, the UK changed their tax code to incentivize the sale of companies to employee ownership trusts. They have exploded in growth, with hundreds of companies in the last ten years converting into trust-based ownership.
In Canada, groups like Social Capital Partners have worked to codify EOTS in Canadian law. They succeeded this year, but without some of the tax incentives supporters of EOTs believe necessary to spur their growth.
In the United States (check out our US database here), growth in EOTs has come from two directions First, groups like Chris Michael at EOT Advisors have translated the British EOT model to the US. Separately, Organically Grown Trust pioneered their multi-stakeholder purpose trust.
Other groups began to build from the European stewardship trust model promoted by groups like the Germany-based nonprofit Purpose. For these groups, employee ownership is just one potential goal of steward ownership, and trusts are one of multiple legal mechanisms for establishing trust ownership.
In the Netherlands, We Are Stewards promotes this kind of steward ownership, in partnership with Purpose.
In Uganda, Rootical Start-up Studio researched the legal feasibility of establishing steward-owned local firms earlier this year (webinar below; slides here).