US House Sends Employee Ownership Valuation Bill to Trump for Signature

A bipartisan bill aimed at clarifying valuation standards for employee stock ownership plans has passed the U.S. House and been sent to U.S. President Donald Trump for signature. According to Sina Finance, the House approved the Retire Through Ownership Act (S.2403) by a vote of 401 to 14 on Wednesday. The bill would address the “adequate consideration” issue, which has been at the center of several recent lawsuits involving employee stock ownership plans. If signed into law, it would allow employee stock ownership plan trustees to hire independent appraisers and use IRS Revenue Ruling 59-60 for valuations. The ruling is an IRS guidance document used to determine the fair market value of shares in privately held companies for tax accounting, equity transfers, and legal dispute resolution. Industry groups have called for revisions to the existing adequate consideration rules, saying the lack of statutory or regulatory guidance has created uncertainty and legal risk for trustees. Data from the National Center for Employee Ownership showed that more than 6,400 companies in the United States had employee stock ownership plans as of January this year.