Encouraging Employee Ownership Act of 2015

Floor Speech

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Mr. DeSAULNIER. Mr. Chairman, this is a straightforward study amendment that intends to build on the potential links between employee-owned corporations and social benefit corporations. This amendment requires the SEC to study overlaps between employee-owned corporations and alternative corporate forms authorized under various State laws.

Alternative corporate forms allow corporations, with the consent of their shareholders, to pursue social and environmental goals as a for- profit business enterprise. With legal protections that allow companies to consider the interests of all stakeholders, benefit corporations can help solve social and environmental challenges through their businesses. Benefit corporation status and other corporate forms allow companies to differentiate themselves and appeal to all consumers.

Alternative corporate forms provide legal protections that benefit innovators, entrepreneurs, investors, and consumers. These legal protections have helped create opportunities for innovation in States like California, which currently attracts almost half of all venture capital investment in the United States.

Some of these alternative corporate forms include flexible purpose corporations, benefit corporations, and low-profit limited liability companies. Benefit corporations, the most common type of alternative corporate form, are authorized in 30 States, including in the District of Columbia, and are currently being considered in five more States. L3Cs are authorized in eight States.

My amendment simply seeks to improve the availability of data so Congress can explore connections between employee-owned corporations and these increasingly popular alternative corporate forms.

Specifically again, this amendment requires the SEC to study and report to Congress the prevalence of employee-owned ownership plans within corporations that also include a flexible or a social benefit component in their articles of incorporation as allowed under relevant State laws.

Mr. Chairman, I urge my colleagues to support this commonsense amendment to improve our understanding of employee-owned corporations.

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Mr. DeSAULNIER. Mr. Chairman, while I respect the gentleman's understanding and his years of work in this field, I think my experience as a new Member who is coming from a State legislature that involved the business community in the development of some of these alternative forms, it is merely providing more information for shareholders and investors. That is why, when we did it in California, we had bipartisan support, including having the support from the business community.

That is the spirit, at least, in which I am offering the amendment. I don't think it would be, from a cost-benefit standard, very hard for the SEC to provide this information to Congress so that, as these forms continue to move throughout the States, we have a better understanding. That is the purpose and the spirit of the amendment.

Mr. Chairman, I yield back the balance of my time.

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Mr. DeSAULNIER. Mr. Chairman, I demand a recorded vote.

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