2373.17 Employee ownership. (1) Definitions.
In this section:
(a) “Direct share ownership plan” means an arrangement in which a portion 25
of the highest class of voting shares of a corporation or voting interest of a member
of a limited liability company is held directly by all tenured employees. The shares 2
or interest may be nontransferable and callable upon termination or retirement of 3
(b) “Eligible transaction” means the qualified transfer of some or all of the 5
shares of a corporation or member interests of a limited liability company to an 6
employee stock ownership plan, employee ownership trust, or direct share 7
ownership plan. An eligible transaction includes an acquisition of shares or member 8
interests by an employee ownership association, as an intermediary, for the purpose 9
of a qualified transfer to an employee stock ownership plan, employee ownership 10
trust, or direct share ownership plan.
(c) “Employee ownership association” means a corporation, limited liability 12
company, trust, or other entity that acts on behalf of the employees of an existing 13
employer for the purpose of achieving the qualified transfer of some or all of the 14
shares or member interests of the employer to ownership by an employee stock 15
ownership plan, employee ownership trust, or direct share ownership plan. An 16
employee ownership association includes a corporation or limited liability company 17
with an existing employee stock ownership plan, employee ownership trust, or direct 18
share ownership plan that acts on behalf of the employees of another employer for 19
the purpose of achieving a qualified transfer by means of a consolidation or merger.
(d) “Employee ownership loan” means any of the following:
1. Any loan to a corporation, limited liability company, employee stock 22
ownership plan, employee ownership trust, or employee ownership association, to 23
the extent that the proceeds are used to acquire shares or member interests of an 24
employer for a qualified transfer.
2. Any loan to a corporation or limited liability company to the extent that, 2
within 30 days, shares or member interests of an employer are transferred to an 3
employee stock ownership plan, employee ownership trust, or direct share 4
ownership plan in an amount equal to the loan and in accordance with the terms of 5
a qualified transfer.
(e) “Employee ownership trust” means a trust, including a foreign trust, that 7
holds the highest class of voting shares of a corporation or voting interest of a member 8
of a limited liability company and that meets the requirements under sub. (2) (a), and 9
may be a noncharitable trust, perpetual trust, or both.
(f) “Employee stock ownership plan” means an employee stock ownership plan, 11
as defined in section 4975
(e) (7) of the Internal Revenue Code.
(g) “Employer” includes 2 or more persons who are treated as a single employer 13
under section 414
(b), (c), (m), or (o) of the Internal Revenue Code.
(h) “Qualified transfer” means the transfer of any amount of shares of a 15
corporation or member interests of a limited liability company to an employee stock 16
ownership plan, employee ownership trust, or direct share ownership plan if all of 17
the following apply:
1. The shares or member interests have voting power equal to or in excess of 19
the class of common shares or member interests of the employer having the greatest 20
2. The shares or member interests have dividend rights equal to or in excess 22
of the class of common shares or member interests of the employer having the 23
greatest dividend rights.
3. If the transfer is to a direct share ownership plan, the largest amount of 25
shares or member interests transferred to any employee does not exceed a multiple
of 10 times the smallest amount of shares or member interests transferred to any 2
(i) “Tenured employee” means any employee or independent contractor who has 4
provided at least 1,000 hours of services to the employer within the immediately 5
preceding 12-month period unless, with respect to an employee ownership trust or 6
a direct share ownership plan, a lower number of hours is established in the terms 7
of the employee ownership trust or direct share ownership plan.
8(2) Employee ownership trusts.
(a) Sections 71.05 (6) (b) 53. and 54. and 71.26 9
(1) (ab) and (2) (a) 13., 14., and 15. apply to an employee ownership trust only if all 10
of the following apply:
1. a. Subject to subd. 1. b., c., d., and e., the employee ownership trust has the 12
exclusive purposes of creating employee ownership by obtaining and holding shares 13
or member interests of an employer and of promoting the financial and nonfinancial 14
interests of all tenured employees.
b. The exclusive purposes of an employee ownership trust may include 16
preserving the ability of all tenured employees to exercise the voting rights of the 17
trust on a one person, one vote basis. This subd. 1. b. does not exempt the trustee 18
from an obligation to carry out the express terms and purpose of the trust in the case 19
of a conflict with the majority decision of all tenured employees.
c. The exclusive purposes of an employee ownership trust may include holding 21
shares or member interests of an employer in perpetuity and preserving the 22
employer in perpetuity.
d. The exclusive purposes of an employee ownership trust may refer to both 24
current and prospective tenured employees.
e. An employee ownership trust may prioritize certain exclusive purposes over 2
2. No principal or income of the employee ownership trust is distributed or 4
allocated to any party other than a tenured employee, except that principal and 5
income of the trust may be distributed to one or more charitable organizations. The 6
employee ownership trust may distribute principal to current and past tenured 7
employees if the trust sells shares or member interests of the employer by 8
establishing a cutoff date for the inclusion of past tenured employees.
3. Principal and income of the employee ownership trust that is distributed or 10
allocated to employees is administered proportionally to all tenured employees on 11
the basis of hours worked, salary, seniority, or any combination of these factors.
(b) 1. An employee ownership trust may limit trustee liability in a manner 13
authorized under subch. X of ch. 701 if the shares or member interests of the 14
employer are voted by the trustee in accordance with the direction of all tenured 15
employees and on a one person, one vote basis and all of the following apply:
a. The trustee votes all employer shares or member interests as a unit in 17
accordance with the majority decision of all tenured employees.
b. Before voting, the trustee furnishes each tenured employee with the 19
information statement and other materials provided to shareholders or members in 20
connection with the shareholder or member meeting, together with a form on which 21
confidential voting directions may be given to the trustee or, if the trustee is not 22
independent of the employer, to an independent 3rd party designated by the trustee, 23
who tabulates votes and provides instructions to the trustee. The trustee or a 3rd 24
party may not disclose the confidential voting directions of any tenured employee to 25
2. This paragraph does not exempt the trustee from an obligation to carry out 2
the express terms and purpose of the trust in the case of a conflict with the majority 3
decision of all tenured employees.
(c) An employee ownership trust is not disqualified from any benefit available 5
under s. 71.05 (6) (b) 53. or 54. or 71.26 (1) (ab) or (2) (a) 13., 14., or 15. solely because 6
the terms of the trust do any of the following:
1. Authorize the trustee to employ an entity, such as a corporation, a limited 8
liability company, or another trust, to hold the shares or member interests of the 9
2. Require that the employer obtain membership in one or more nonprofit 11
3. Require that the employer pay market rate wages or benefits or both.
4. Require that the employer retain a percentage of annual net income as 14
permanent reserves that will never be distributed to employees.
5. Impose other requirements to promote the long-term financial health of the 16
employer and the continued ability of the employer to provide high-quality jobs 17
under conditions of employee ownership to all current and prospective tenured 18
6. Appoint a trust protector or cotrustee or both to enforce the trust and approve 20
amendments to the trust.
238.147 of the statutes is created to read:
22238.147 Employee ownership loans and loan guarantees. (1) 23Definitions.
In this section:
(a) “Eligible transaction” has the meaning given in s. 73.17 (1) (b).
(b) “Employee ownership association” has the meaning given in s. 73.17 (1) (c).
(c) “Employee ownership loan” has the meaning given in s. 73.17 (1) (d).
(d) “Total cost” means all reasonable and necessary costs to be incurred in the 3
course of an eligible transaction, including the fair market value of the business 4
interest to be acquired, as well as costs for any additional construction, land 5
acquisition, improvements, equipment, pertinent rights and easements, and 6
associated technical, engineering, legal, and financial services.
7(2) Establishment of program.
The corporation shall establish and administer 8
an economic development program under this section to make employee ownership 9
loans and employee ownership loan guarantees to eligible applicants.
Any corporation, limited liability company, trust, or employee 11
ownership association may apply to the corporation for an employee ownership loan 12
or employee ownership loan guarantee or both to finance an eligible transaction.
13(4) Loans and loan guarantees.
The corporation may contract with an 14
applicant under sub. (3) to do any of the following:
(a) Make an employee ownership loan to the applicant equal to up to 40 percent 16
of the total cost. At least 50 percent of a loan made under this paragraph shall be 17
(b) Guarantee up to 100 percent of employee ownership loans made to the 19
applicant by lenders other than the corporation. All loan guarantees made to an 20
applicant under this paragraph may not exceed 80 percent of the total cost.
The corporation shall make a loan decision or a loan guarantee 22
decision under sub. (4), and inform the applicant of the corporation's decision, no 23
later than 30 days after the corporation receives the applicant's application for an 24
employee ownership loan or employee ownership loan guarantee under sub. (3). If 25
the corporation requests that an applicant supplement its application by submitting
additional information, the corporation shall have an additional 15 days after 2
receiving the additional information by which the corporation must make a loan 3
decision or a loan guarantee decision under sub. (4) and inform the applicant of the 4
(1) Center for employee ownership.
The Board of Regents of the University 7
of Wisconsin System shall establish the center for employee ownership under section 8
36.25 (54) of the statutes no later than 180 days after the effective date of this 9