An Employee Ownership Trust is usually governed in three layers: a trustee who holds the company in trust and owes a fiduciary duty to the employee beneficiaries, the company's board of directors that runs the business, and a trust stewardship committee (often including employees) that represents employee interests and safeguards the company's mission. The exact roles and how they interact are set in the trust documents.
An Employee Ownership Trust (EOT) separates ownership from day-to-day management, and the governance structure reflects that. Most EOTs use three layers, with the specifics set out in the trust documents:
- Trustee. The trustee holds the company on behalf of the employee beneficiaries and owes them a fiduciary duty — a legal obligation to act in their best interests. Often this is a "directed" corporate trustee that handles administration and filings rather than running the business or making day-to-day decisions.
- Board of directors. The company's board continues to govern the business — strategy, hiring executives, major decisions — much as in any company. The trust, as owner, ultimately stands behind the board.
- Trust stewardship committee. Many EOTs add a committee, often including employees, that represents employee interests and helps safeguard the company's mission and the purpose the trust was created to protect.
How these bodies relate — who appoints whom, whether a stewardship representative attends board meetings, how profit-sharing is decided — is customized when the trust is drafted, so it varies from one EOT to the next. Note that EOT structures differ between the US and UK, so the layers and their legal treatment depend on where the company is based.
These are governance and legal design choices best worked through with an advisor experienced in employee-ownership transitions. This is general information, not legal or tax advice.