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Home > Resources > ESOP > Who Votes the Shares Held in the ESOP?

Who Votes the Shares Held in the ESOP?

November 25, 2020 By Employee Benefits Law Group

The Code requires that company stock in the ESOP must have full voting rights. In this video, we discuss who votes the shares held in the ESOP.

 

Voting Rights for ESOP Participants

Since the ESOP trustee is the shareholder, the trustee is required by law and has a fiduciary duty by law to vote the shares in the plan. The ESOP trustee votes the shares in any situation where a shareholder vote is required. They also annually elect the board of directors and approve larger transactions or signature transactions.

However, in a certain small list of transactions in the Code, the trustee is required to pass through or request for voting instructions to the ESOP participants in the event of merger, liquidation, dissolution, or sale of substantially all of the assets of the company. These are rare events, but events that do come up from time to time for mature ESOP companies.

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EDITOR’S NOTE: We did the best we could to make sure the information and advice in this article were current as of the date of posting to the web site. Because the laws and the government’s rules are changing all the time, you should check with us if you are unsure whether this material is still current. Of course, none of our articles are meant to serve as specific legal advice to you. If you would like that, please call us at (916) 357-5660.

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