• Canadian employee ownership,  EOTs,  ESOPs in Canada

    Employee Ownership Trust (EOT) is in Canada

    Most recent info on Canada’s Employee Ownership Trust (EOT) Canadian business owners thinking about succession plans may be curious about a new option when considering an employee ownership transition; the EOT. Employee Share Ownership Plans (ESOPs) in Canada have been used by business owners as they are shown to facilitate numerous benefits; increased retention, engagement, productivity, and profit. They can also improve the country’s economy by spreading the wealth more fairly, protecting small businesses and local work, and improving resiliency of these businesses. The government has created an Employee Ownership Trust (EOT) which comes with tax incentives for business owners who decide the EOT is a fit for their goals.As of January…

  • Canadian employee ownership,  Culture,  Employee Ownership,  ESOP Benefits,  ESOPs in Canada,  participative culture

    Recognition and Culture to create Engagement

    As a business owner, you know how important it is to attract and retain top talent, so you’ve created an employee share ownership plan; recognition and engagement are important. This can be a great strategy to offer recognition of employees’ efforts in order to increase engagement and retention. Recognition and Engagement I recently read an article in Benefits and Pensions Monitor called “How recognition bolsters engagement and shields employees from burnout”, which indicated a few things that align with ESOPs. A report from Workhuman and Gallup, ‘Empowering Workplace Culture Through Recognition’ shows employees who believe that recognition is an important part of their organization’s culture are 3.7 times as likely…

  • Canadian employee ownership,  Capitalism and Employee Ownership,  Employee Ownership Trust,  EOTs,  ESOPs in Canada

    EOT Announcement in Budget and why it probably doesn’t mean much for Employee Ownership

    Hello ESOP Community, The government has proposed legislation regarding employee ownership trusts (EOTs) in the 2023 budget. Any talk about ESOPs in Canada is extremely positive and will bring great awareness to Employee Ownership in general. The government has provided some detail compared to what they said in 2021 and 2022 and announced implementation of EOTs by January, 2024. Unfortunately, while this could provide an additional mechanism for how to structure a Plan in certain limited circumstances, the proposed EOT has really missed the mark and the government does not seem to have listened to the recommendations given to create more Employee Ownership. These limited circumstances for its use would…

  • Canadian employee ownership,  Employee Ownership,  Employee Ownership Trust,  employee-owned company,  EOTs,  ESOP Benefits,  ESOPs in Canada,  Founding Owners,  income equality,  Owners,  Retention,  Succession planning,  Talent attraction

    EOTs: Are Employee Ownership Trusts right for Canada?

    Originally published Jan 2023. Updated March 31, 2023 and May 3, 2024. Employee Ownership Trusts in Canada Overall, there are a couple of ways to achieve “Employee Ownership” in Canada. EOTs could be an another type of structure to achieve Employee Ownership depending on the goals the owner would like the plan to achieve. Employee Share Ownership Plan (ESOP) Worker Co-op The main difference between these two is that votes are equal in a co-op whereas in an ESOP votes are dependent on the shareholders’ type of share (voting or non-voting) and how many shares they own.  In Canada, we consider an ESOP the umbrella term, but there are different…

  • Canadian employee ownership,  Communication,  employee-owned company,  ESOP Benefits,  ESOPs in Canada,  Founding Owners,  participative culture,  Succession planning,  Taxes

    5 questions business owners ask about ESOPs in Canada

      What are the tax benefits to owners and employees?  When setting up an ESOP in Canada it is important to know there are no federal laws that govern ESOPs specifically. ESOPs are set up following securities legislation and The Income Tax Act of Canada. However, a major consideration to designing a plan is the tax treatment to employee shareholders. Plans can be designed so that employees of a Canadian Controlled Private Corporation (CCPC) who become shareholders would not be subject to tax when getting the shares and can access capital gains tax treatment when the shares are sold (50% of the gain is taken into income and taxed at…

  • Canadian employee ownership,  Communication,  Culture,  ESOP Benefits,  participative culture

    The magic ingredient for creating a successful ESOP

    Employee ownership works. It makes companies, on average, better, faster, and stronger. The typical employee-owner stays with his or her company longer, and many of them come up with the kinds of creative ideas that can push expenses lower than managers thought possible, or that open up new lines of business. Overall, the statistics show that, on average, everyone comes out ahead with employee ownership. Not surprisingly, some companies do far better than their peers, and some employee-owned businesses do not get any performance benefit at all, or may even do worse.  What separates the companies that outperform from the ones that underperform? A successful ESOP requires open communication. The…

  • Canadian employee ownership

    You have an ESOP; now what?

    Putting in place a new plan, any plan, is always only the first step; it never runs itself. ESOPs are no different. It is not a set it and forget it tool. The ESOP transaction is over and has been well received; now the cultural transformation begins. The initial euphoria provides momentum for the work ahead, but how do you harness it into meaningful actions? Employees may be hesitant and uncertain about how to go about this. It is up to the board of directors and/or the leadership individual(s) to channel this new entrepreneurial energy and focus it on the goals of the corporation. The goal for the ESOP team…

  • employee-owned company,  ESOP Benefits,  Retention,  Succession planning,  Talent attraction

    The Case for an ESOP as an Attraction and Retention Tool

    The shut-down of the economy has lasted for almost 2 months and businesses are either facing negative impacts from the COVID-19 crisis, along with most Canadian businesses, or are among the minority of businesses experiencing positive impacts. It’s likely that very difficult business decisions have had to be made to ensure your company’s existence through the crisis. Part of the challenge is having to lay off valued employees, and maintain a positive culture. Although things are still changing rapidly, business owners are likely considering long-term impacts on the company’s ability to retain their employees, but also to attract top talent once the crisis is behind us. The many reasons why owners…

  • employee-owned company

    The Philosophy that allows ESOPs (Employee Share Ownership Plans) to create incredibly successful companies.

    First is the philosophy of personal wealth creation. Employees are motivated by financial gain and ESOPs deliver wealth. Second is the philosophy of cultural engagement on a personal basis. The Theory of Group Wisdom holds that groups are more successful over individuals due not to the intellect of each person but due to the social interaction of the group. ESOPs create the conditions of group success through a participative culture of engagement. The combination of personal wealth creation and social interaction create a synergy that few non-ESOP companies can match. The results are ESOP companies with higher productivity, higher profitability, more innovation, and wealthier employees. By Perry Phillips, President and Founder…

  • employees,  ESOP Benefits,  Taxes

    Canadian Tax Issues for ESOPs

    The Canadian tax deadline is May 1st and as we all know only two things in life are certain – death and taxes. And for a lot of people doing taxes is a death defying experience. ESOPs or Employee Share Ownership Plans have special tax related issues. There are three types of ESOPs in Canada.

  • employee-owned company,  ESOP Benefits,  Succession planning

    Employee Share Ownership Plans from the Owner’s Perspective

    Most owners of privately-held companies are also the founders.  Why?  At some point in the past, they had a dream and a desire to own their own business.  For many, this required giving up a secure job working for someone else and entering the uncertain and ambiguous realm of an entrepreneur.  Although there was a huge risk, they believed in themselves and their dream, and they took the leap.  For many, this required using their own savings, as well as putting their house and everything they owned on the line as collateral.  This was not an easy decision on their part.

  • Communication,  Succession planning

    Employee Engagement is Affected by Neuroscience

    What is the foundation for effective employee engagement within your ESOP? Trust.  Actually, trust is the foundation for every relationship, in any area of your life.  And the only way to create a workplace environment for greater connection, collaboration, innovation, creativity, and success, is by building incrementally higher levels of trust every day. A basic understanding of neuroscience can allow us to have a simple, understandable dialogue about some of the elements that instill trust, employee engagement, and can lead to an even more successful Employee Share Ownership Plan (ESOP).

  • ESOP Benefits,  Management Buyout,  Succession planning

    How Does a Management Buyout Relate to an ESOP?

    A “management buyout” is a buzz phrase currently used in many business discussions, and for good reason. The greatest generation of entrepreneurs in Canadian history will retire within the next 10 to 15 years, and these men and women are looking for a way to exit their companies in a way that meets their needs.  Not only do they want to leave with an abundance of retirement funds, they also want to leave a legacy.  They want to ensure the business they built and nurtured will thrive and continue to support the employees and enhance the community.

  • Canadian employee ownership,  Employee Ownership,  EOTs,  ESOP Benefits,  ESOPs in Canada,  Retention,  Talent attraction

    How Employee Share Ownership Helps You Attract and Retain Key People

    A majority of the companies we work with share that one of the major goals for implementing an employee share ownership plan (ESOP) is to attract and retain key people. While many owners know intrinsically that ownership will help with this important issue, their assumptions are backed by research.

  • B Corp,  Canadian employee ownership,  Employee Ownership

    B Corps and ESOPs – Best of Both Worlds

    Updated December 2022 A new business certification called B Corp is becoming a leading business innovation, and the model works extremely well with an ESOP. B Corp companies have a mission to maximize “stakeholder value.” Stakeholders include employees, community and the environment, in addition to shareholders. Consider it like certification of a LEED building or Fair trade coffee, but for companies.