DOL Proposal Sets New Worker-Ownership Appraisal Standards (1)

Business owners selling their shares in a company to their workers must ensure compliance with a two-part test to ensure employees’ shares are appraised fairly, under a new US Labor Department proposal.

The DOL’s Employee Benefits Security Administration issued the long-awaited proposed rule (RIN No. 1210-AC20) on Thursday, putting the agency on record after a nearly four-decade hiatus on the definition of “adequate consideration” as it applies to the fair market value of employee stock ownership plans.

The proposed rule sets out the two-fold test for plan fiduciaries in the formation of ESOPs, requiring parties implement a “good-faith” ...