Laws to Encourage Broad-Based Employee Ownership Outside the U.S.

Summary

This article provides a snapshot of laws in countries outside the U.S. specifically designed to encourage broad-based employee ownership. It does not discuss stock options, restricted stock, stock appreciation rights, or phantom stock as these plans are rarely used outside the U.S. for broad-based employee ownership and no country has laws that specifically encourage their use for these purposes. A good resource for the laws on this subject can be found on the website of the international law firm of Baker & McKenzie, which publishes an updated 40-country matrix on the topic.

There is one exception to this rule, namely in Ireland which has an approved share option plan for broad-based participation. Also not included are the employee ownership privatization programs that were very common in the former Soviet-bloc countries during the 1980s and 1990s. Those programs are largely complete and few of the employee-owned companies that resulted remain employee-owned. China has also used employee ownership extensively for this purpose at the provincial level but, unfortunately, there are no recent or reliable sources describing the extent of these programs or their rules. The information gathered here comes from the PEPPER IV Report, a private academic 2009 on employee ownership in Europe, country employee ownership associations in the U.K. and Australia, government sources in South Africa, and the Web.