Texas Senate Bill SB1650

Texas 2019 - 86th Regular

Caption

Relating to employee-owned companies.

Impact

The potential impact of SB1650 on state laws is significant. It alters the Business Organizations Code to define and recognize employee stock ownership plans within professional corporations. Furthermore, it establishes a framework whereby the state government and local authorities can prefer purchasing from Texas-domiciled employee-owned companies. This move may encourage the growth of ESOPs within Texas, empowering employees and ensuring a broader distribution of wealth among workers.

Summary

Senate Bill 1650 seeks to enhance the framework for employee-owned businesses in Texas by amending existing state laws to facilitate the establishment and support of employee stock ownership plans (ESOPs). This bill introduces measures that allow both state and local governments to give preferential treatment to employee-owned companies in procurement processes. Furthermore, the creation of the Employee Ownership Assistance Office is proposed to provide outreach and technical assistance to businesses considering ESOPs, effectively nurturing a favorable environment for businesses transitioning into employee ownership.

Contention

Despite its intended benefits, there may be contention surrounding the bill, particularly from traditional business sectors or those concerned about the implications of fostering employee ownership. Critics may argue that preferential treatment in state and local procurement could undermine competition and potentially disadvantage traditional corporations. Additionally, the effectiveness of the Employee Ownership Assistance Office and its outreach strategy might draw scrutiny, particularly regarding its capacity to engage small businesses effectively.