EOT:Independent Trustee

Employee Ownership Trusts have been around in their present form for over ten years and are gaining in popularity for a variety of reasons.  The underlying ethos is that the existing owners sell their company to a trust which holds the shares for the benefit of the employees.

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On sale of the company, who owns it?

Usually, a corporate trust company with directors who are then normally classed as 'the Trustees'.  Ownership is not a small thing and needs to be effectively managed.

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Who should govern the Trust?

Well, the trustees logically but who should be the trustees?  A mix of directors, employees, former owners and, good practice, an Independent Trustee.  And it is this Independent role that I take in working with EOTs.

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Why have an Independent Trustee?

This is where the Hats image here is relevant. Trustees who have a connection with the operating company can find themselves wearing many hats, each of which can represent a potential conflict.  For instance, the former owner could find themselves being Vendor, Creditor, Director, Employee and Trustee. Right now, it is good practice but not mandatory to have an external party who only wears one hat; who can act as the arbiter of good practice and director on conflicts. 

Why use an experienced Independent Trustee?

In many ways, the trustees are positive Activist Investors in the operating company owned by the trust. They don't direct it but they can influence it. In order to look after the interests of the employees they need to be skilled in finance strategy, corporate law, governance, compliance, stakeholder communications and other areas.

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An effective way to ensure that these skills are acknowledged is to bring on board an Independent Trustee with skills in these areas to act as the project manager, coach and mentor for the trustee group.

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My role as Independent Trustee

I have the breadth of skills noted above and experience both in charitable trusteeship and now in EOTs

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