SB460: Bill Text

SB460,8,13 (g) “Employer” includes 2 or more persons who are treated as a single employer under section 414 (b), (c), (m), or (o) of the Internal Revenue Code.

SB460,8,17 (h) “Qualified transfer” means the transfer of any amount of shares of a corporation or member interests of a limited liability company to an employee stock ownership plan, employee ownership trust, or direct share ownership plan if all of the following apply:

SB460,8,20 1. The shares or member interests have voting power equal to or in excess of the class of common shares or member interests of the employer having the greatest voting power.

SB460,8,23 2. The shares or member interests have dividend rights equal to or in excess of the class of common shares or member interests of the employer having the greatest dividend rights.

SB460,9,2 3. If the transfer is to a direct share ownership plan, the largest amount of 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 tenured employee.

SB460,9,7 (i) “Tenured employee” means any employee or independent contractor who has provided at least 1,000 hours of services to the employer within the immediately preceding 12-month period unless, with respect to an employee ownership trust or a direct share ownership plan, a lower number of hours is established in the terms of the employee ownership trust or direct share ownership plan.

SB460,9,10 (2) Employee ownership trusts. (a) Sections 71.05 (6) (b) 53. and 54. and 71.26 (1) (ab) and (2) (a) 13., 14., and 15. apply to an employee ownership trust only if all of the following apply:

SB460,9,14 1. a. Subject to subd. 1. b., c., d., and e., the employee ownership trust has the exclusive purposes of creating employee ownership by obtaining and holding shares or member interests of an employer and of promoting the financial and nonfinancial interests of all tenured employees.

SB460,9,19 b. The exclusive purposes of an employee ownership trust may include preserving the ability of all tenured employees to exercise the voting rights of the trust on a one person, one vote basis. This subd. 1. b. does not exempt the trustee from an obligation to carry out the express terms and purpose of the trust in the case of a conflict with the majority decision of all tenured employees.

SB460,9,22 c. The exclusive purposes of an employee ownership trust may include holding shares or member interests of an employer in perpetuity and preserving the employer in perpetuity.

SB460,9,24 d. The exclusive purposes of an employee ownership trust may refer to both current and prospective tenured employees.

SB460,10,2 e. An employee ownership trust may prioritize certain exclusive purposes over others.

SB460,10,8 2. No principal or income of the employee ownership trust is distributed or allocated to any party other than a tenured employee, except that principal and income of the trust may be distributed to one or more charitable organizations. The employee ownership trust may distribute principal to current and past tenured employees if the trust sells shares or member interests of the employer by establishing a cutoff date for the inclusion of past tenured employees.

SB460,10,11 3. Principal and income of the employee ownership trust that is distributed or allocated to employees is administered proportionally to all tenured employees on the basis of hours worked, salary, seniority, or any combination of these factors.

SB460,10,15 (b) 1. An employee ownership trust may limit trustee liability in a manner authorized under subch. X of ch. 701 if the shares or member interests of the employer are voted by the trustee in accordance with the direction of all tenured employees and on a one person, one vote basis and all of the following apply:

SB460,10,17 a. The trustee votes all employer shares or member interests as a unit in accordance with the majority decision of all tenured employees.

SB460,10,25 b. Before voting, the trustee furnishes each tenured employee with the information statement and other materials provided to shareholders or members in connection with the shareholder or member meeting, together with a form on which confidential voting directions may be given to the trustee or, if the trustee is not independent of the employer, to an independent 3rd party designated by the trustee, who tabulates votes and provides instructions to the trustee. The trustee or a 3rd party may not disclose the confidential voting directions of any tenured employee to the employer.

SB460,11,3 2. This paragraph does not exempt the trustee from an obligation to carry out the express terms and purpose of the trust in the case of a conflict with the majority decision of all tenured employees.

SB460,11,6 (c) An employee ownership trust is not disqualified from any benefit available under s. 71.05 (6) (b) 53. or 54. or 71.26 (1) (ab) or (2) (a) 13., 14., or 15. solely because the terms of the trust do any of the following:

SB460,11,9 1. Authorize the trustee to employ an entity, such as a corporation, a limited liability company, or another trust, to hold the shares or member interests of the employer.

SB460,11,11 2. Require that the employer obtain membership in one or more nonprofit associations.

SB460,11,12 3. Require that the employer pay market rate wages or benefits or both.

SB460,11,14 4. Require that the employer retain a percentage of annual net income as permanent reserves that will never be distributed to employees.

SB460,11,18 5. Impose other requirements to promote the long-term financial health of the employer and the continued ability of the employer to provide high-quality jobs under conditions of employee ownership to all current and prospective tenured employees.

SB460,11,20 6. Appoint a trust protector or cotrustee or both to enforce the trust and approve amendments to the trust.

SB460,10 Section 10. 238.147 of the statutes is created to read:

SB460,11,23 238.147 Employee ownership loans and loan guarantees. (1) Definitions. In this section:

SB460,11,24 (a) “Eligible transaction” has the meaning given in s. 73.17 (1) (b).

SB460,11,25 (b) “Employee ownership association” has the meaning given in s. 73.17 (1) (c).

SB460,12,1 (c) “Employee ownership loan” has the meaning given in s. 73.17 (1) (d).

SB460,12,6 (d) “Total cost” means all reasonable and necessary costs to be incurred in the course of an eligible transaction, including the fair market value of the business interest to be acquired, as well as costs for any additional construction, land acquisition, improvements, equipment, pertinent rights and easements, and associated technical, engineering, legal, and financial services.

SB460,12,9 (2) Establishment of program. The corporation shall establish and administer an economic development program under this section to make employee ownership loans and employee ownership loan guarantees to eligible applicants.

SB460,12,12 (3) Application. Any corporation, limited liability company, trust, or employee ownership association may apply to the corporation for an employee ownership loan or employee ownership loan guarantee or both to finance an eligible transaction.

SB460,12,14 (4) Loans and loan guarantees. The corporation may contract with an applicant under sub. (3) to do any of the following:

SB460,12,17 (a) Make an employee ownership loan to the applicant equal to up to 40 percent of the total cost. At least 50 percent of a loan made under this paragraph shall be senior debt.

SB460,12,20 (b) Guarantee up to 100 percent of employee ownership loans made to the applicant by lenders other than the corporation. All loan guarantees made to an applicant under this paragraph may not exceed 80 percent of the total cost.

SB460,13,4 (5) Timeliness. The corporation shall make a loan decision or a loan guarantee decision under sub. (4), and inform the applicant of the corporation's decision, no later than 30 days after the corporation receives the applicant's application for an employee ownership loan or employee ownership loan guarantee under sub. (3). If the corporation requests that an applicant supplement its application by submitting additional information, the corporation shall have an additional 15 days after receiving the additional information by which the corporation must make a loan decision or a loan guarantee decision under sub. (4) and inform the applicant of the corporation's decision.

SB460,11 Section 11. Nonstatutory provisions.

SB460,13,9 (1) Center for employee ownership. The Board of Regents of the University of Wisconsin System shall establish the center for employee ownership under section 36.25 (54) of the statutes no later than 180 days after the effective date of this subsection.

SB460,13,10 (End)