Bill Would Allow Small Businesses to Offer Employee Stock Ownership Plans (ESOPs)
WASHINGTON, D.C. – Today, Senators Thom Tillis (R-NC) and Gary Peters (D-MI) and Representatives Mike Kelly (R-PA-16) and Brian Higgins (D-NY-26) introduced bipartisan, bicameral legislation that would allow many small businesses to offer Employee Stock Ownership Plans (ESOPs).
Currently, Internal Revenue Service (IRS) regulations limit the ability of public companies traded on non-exchange markets to offer ESOPs to their employees. Public companies quoted on these markets are forced to treat their stock as “private” for ESOP purposes. Despite having a publicly-quoted price on a regulated over-the-counter market, outdated regulations require these companies to use an independent appraisal to establish the value of their securities.
This bipartisan legislation would update the meaning of “established securities market” and would allow hundreds of companies to offer ESOPs to thousands of U.S. employees, which adds value to corporate equity, aids employee retention and ultimately promotes small company growth and development.
“The current limitations placed on certain small businesses by not allowing them to offer employees ownership is costly to both businesses and employees,” said Senator Tillis. “This bipartisan legislation would change the law to ensure we allow these qualified small businesses to offer their employees a stake in the company they work for.”
“Providing small businesses additional pathways to retain and recruit talent is critical to supporting the companies that help drive our state’s economy,” said Senator Peters, a member of the Senate Commerce, Science and Transportation Committee. “The ESOP Fairness Act would allow more small businesses across Michigan to easily offer ESOP plans to their employees, allowing them to expand corporate equity, aid employee retention and create jobs. I look forward to building support for this bipartisan measure.”
“The fast path to financial prosperity for working Americans is through ownership of property and businesses,” said Congressman Mike Kelly. “We can make a difference right now by allowing small and medium-sized businesses to include employee ownership stake in their compensation. It’s a no-brainer, a win-win, and we can do it right now by passing this bipartisan plan.”
“When employees have a stake in the success of their workplace, everyone benefits,” said Congressman Brian Higgins. “The ESOP Fairness Act will create opportunities for businesses and their employees alike to invest in each other’s success and growth, resulting in empowered workers, increased workplace longevity, and strong employee retirement benefits.”