Governance within an Employee Ownership Trust (EOT)

As experts in this sector, we can provide comprehensive advice throughout an EOT journey from pre-transaction planning to beyond completion. We have a wealth of experience in EOT transactions having advised on 15 to date in 2024 and over 30 in total in the past few years. Known for our hands on, simplified and hassle-free transaction process to ensure a timely transition to employee ownership. We have covered in an earlier article the benefits of an EOT transaction and its impact going forward. Here we discuss the governance or the desired governance of an EOT structure:

Trustees:

• The EOT is managed by a board of trustees, which typically includes representatives from the company’s directors, employees, and sometimes an independent trustee.
• Trustees are responsible for acting in the best interests of the employees, who are the beneficiaries of the trust.

Employee Involvement:

• Employees may have representation on the board of trustees or other governance bodies, giving them a direct say in strategic decisions.
• This structure promotes transparency and accountability, fostering a sense of ownership and engagement among employees.

Decision-Making:

• While day-to-day operations are usually managed by the existing leadership team, strategic decisions often require consultation with or approval by the trustees.
• This ensures that major decisions align with the interests of the employees and the long-term success of the company.

Legal and Financial Oversight:

• Trustees oversee the financial health of the company and ensure that profits are distributed fairly among employees, often through bonuses or profit-sharing schemes.
• They also ensure compliance with legal and regulatory requirements related to the EOT.

Benefits to Employees:

• Employees, as beneficiaries of the trust, can receive financial benefits such as annual bonuses or profit shares.
• This setup aims to motivate and reward employees without the complexity of individual share ownership.

Overall, EOT governance aims to balance effective management with employee participation, creating a collaborative and motivated workforce.

If you would like further information or a meeting with us to discuss EOT transactions, please do get in touch.