EOT Potential Explored

The federal government will explore options to unlock the potential of employee ownership trusts (EOTs) as part of Canada's economic recovery, says Social Capital Partners. Announced in the 2021 federal budget, this is a first step, toward making broad-based employee ownership a more significant part of the economy. "There is a large body of research from around the world that points to employee ownership trusts as a powerful tool to reduce wealth inequality, support business succession, protect local jobs, and promote economic resilience," says Jon Shell, managing partner of Social Capital Partners. "It's great to see the government recognize that employee ownership could be part of rebuilding a more inclusive, more resilient economy." In the U.S. and the UK, public policy encourages the use of EOTs and they are a popular structure for business succession. Employee-owned companies grow faster, pay better, are less prone to lay-offs or bankruptcies in economic downturns, and are more likely to keep jobs in local economies, it says. Canada does not have a business structure comparable to the employee ownership trust.