What you need to know to get a NED role with an Employee Ownership Trust (EOT)

In this blog, we discuss some of the basics of EOTs to inform our community of the opportunities that lie ahead.

 

What is an Employee Ownership Trust

Employee Ownership Trust (EOT) is a type of trust structure that allows business owners to sell their company to an Employee Ownership Trust, which then holds the shares on behalf of the employees of the business. This means that the employees become the beneficial owners of the company and have a say in how the company is run, through the appointment of trustees who represent their interests.

In the UK, EOTs were introduced in 2014 as part of the government’s drive to encourage employee ownership. They are becoming increasingly popular in the UK, particularly among small and medium-sized enterprises (SMEs). They are seen as a way of promoting employee engagement and motivation, as well as providing a succession plan for business owners who wish to retire or exit their business.

 

The non-executive director role serving on the board of EOTs

Serving as a non-executive on an Employee Ownership Trust (EOT) means that you would be appointed to the board of trustees of the trust, which is responsible for holding the shares in the company on behalf of the employees. As a non-executive, your role would be to provide independent oversight of the trust’s activities and to ensure that the trust is managed in the best interests of the employees.

 

Key responsibilities of NEDs in EOTs

Some of the key responsibilities of a non-executive on an EOT include:

• Monitoring the performance of the company and the trust, and ensuring that they are aligned with the interests of the employees.
• Ensuring that the trust is managed in compliance with the trust deed and the relevant laws and regulations.
• Providing independent advice and support to the board of trustees and the employees.
• Participating in board meetings and contributing to strategic decision-making.
• Ensuring that the trust has adequate financial resources and that it is operating within its budget.
• Communicating with the employees and ensuring that their views and concerns are taken into account.
• Providing oversight of the company’s remuneration policies, to ensure that they are fair and aligned with the interests of the employees.

 

Good governance is crucial to the success of an Employee Ownership Trust (EOT), as it ensures that the trust is managed in the best interests of the employees and that the company remains sustainable over the long term.

Serving as a non-executive on an EOT can be a rewarding experience, as it offers the opportunity to contribute to the success of a company while also promoting employee ownership and engagement.

 

Written by Elise Perraud, NEDonBoard COO

 

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