Fully employee-owned companies are still relatively rare in Canada, owing to the complexities of setting up and managing them
A group that includes some prominent Canadian business leaders has launched a new coalition to promote employee ownership and push Ottawa for changes that would make the model a more viable option in succession planning.employee ownership trustThe coalition is also pitching a capital-gains tax exemption for business owners who sell a majority of their companies to workers, rather than strike deals with competitors or private-equity firms.
The Liberal Party said in its last budget in April that it would create such a trust, although that has yet to happen. The coalition wants to show Ottawa that not only is there broad support for the idea in corporate circles, but several business owners are ready to transfer ownership to their workers, provided that hurdles are removed.
But fully employee-owned firms are still relatively rare in Canada, owing to the complexities of setting up and managing them, according to the coalition and its supporters.The transfer process often works as follows: A trust takes on debt to purchase the company, with the loan repaid from company earnings over several years. In return, the seller gets a more favourable tax treatment. The idea is that employees don’t pay out of their own pockets to finance the deal.
Employee ownership has proven popular in other countries. As of 2019, nearly 14 million people in the U.S. participated in employee stock ownership plans, which hold total assets of about US$1.7-trillion. In some cases, employees have retired with millions in accrued wealth.
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