Massachusetts 2025-2026 Regular Session

Massachusetts Senate Bill S305 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 of 1
2	2	SENATE DOCKET, NO. 1997 FILED ON: 1/17/2025
3	3	SENATE . . . . . . . . . . . . . . No. 305
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Paul W. Mark
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act promoting entrepreneurship through employee ownership.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Paul W. MarkBerkshire, Hampden, Franklin and
16	16	Hampshire
17	17	Julian CyrCape and Islands2/14/2025 1 of 5
18	18	SENATE DOCKET, NO. 1997 FILED ON: 1/17/2025
19	19	SENATE . . . . . . . . . . . . . . No. 305
20	20	By Mr. Mark, a petition (accompanied by bill, Senate, No. 305) of Paul W. Mark and Julian Cyr
21	21	for legislation to encourage businesses to give their employees a stake in the company, often
22	22	through stock options or Employee Stock Ownership. Economic Development and Emerging
23	23	Technologies.
24	24	The Commonwealth of Massachusetts
25	25	_______________
26	26	In the One Hundred and Ninety-Fourth General Court
27	27	(2025-2026)
28	28	_______________
29	29	An Act promoting entrepreneurship through employee ownership.
30	30	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
31	31	of the same, as follows:
32	32	1 Chapter 23D of the General Laws as appearing in the 2022 Official Edition is hereby
33	33	2amended by adding the following after Section 6:-
34	34	3 Section 6A
35	35	4 (a) As used in this section, the following words shall have the following meanings unless
36	36	5the context clearly requires otherwise:-
37	37	6 “Qualified Business”, an entity that: (i) Has operated a principal place of business in
38	38	7Massachusetts for at least one year (ii) Is a taxpayer subject to Massachusetts tax under relevant
39	39	8tax articles (MGL c. 62B), but not limited to a C corporation, S corporation, limited liability
40	40	9company, partnership, limited liability partnership, or a sole proprietorship (iii) Is a privately
41	41	10held business (iv) Has at least three workers not including the owner, or other similar pass-
42	42	11through entity (v) Meets the relevant size standards for a small business by industry, as set forth 2 of 5
43	43	12by the U.S. Small Business Administration in 13 CFR 121.201 (vi) Is not a medium or large
44	44	13business as defined by the US Small Business Administration (vii) Is not a publicly traded
45	45	14company
46	46	15 “Owner”, The owner(s) of a Qualified Business prior to a Qualified Business Sale
47	47	16 “Qualified Employee Group” (QEG), A group containing at least a simple majority of
48	48	17full-time and/or part-time workers at the Qualified Business, totaling a minimum of three, at the
49	49	18point of formal notice of business sale by the Owner to workers
50	50	19 “Employee Owned Business”, (i) An employee cooperative corporation organized under
51	51	20Chapter 157A of the Massachusetts General Laws, or (ii) A Limited Liability Company (LLC) or
52	52	21Limited Liability Partnership (LLP), in either case, whose bylaws, operating agreement or
53	53	22partnership agreement, as applicable, meets the following requirements: (A) All persons who
54	54	23meet the definition of employee owner (“worker owner”) according to the bylaws, operating
55	55	24agreement or partnership agreement of the business are voting members of the company, and
56	56	25have equal voting rights in all decisions brought before the membership, and (B) any profits
57	57	26distributed to said worker-owners by the company are distributed on the basis of their patronage
58	58	27in the company, with patronage measured based on the labor supplied to the company.
59	59	28 “Qualified Business Sale”, Any transaction between the Owner of a Qualified Business
60	60	29and a QEG that concludes in the Qualified Business becoming an Employee Owned Business or
61	61	30at least a 51% increment of total ownership of the Qualified Business being transferred to an
62	62	31Employee Owned Business. Such transaction shall not include transfers by inheritance, nor
63	63	32transfers or sales to immediate family, defined as siblings, spouses and/or children. 3 of 5
64	64	33 (b) (i) In the event the Owner of a Qualified Business decides to sell such Qualified
65	65	34Business or at least a 51% increment of total ownership of such Qualified Business in an equity
66	66	35sale, they must notify all current full-time and part-time workers at the business within seven
67	67	36days of the decision in a dated written notice as specified below. Such notice must be posted on
68	68	37the date listed in the notice in a prominent location to which all workers have access, or if no
69	69	38such place exists, via an existing electronic medium used to communicate with workers. Such
70	70	39notice must communicate: (A) Date of the notice (B) The Owner’s intent to sell the business (C)
71	71	40Contact information for the Massachusetts Center for Employee Ownership (MassCEO),
72	72	41including the MassCEO website, specifying MassCEO as a resource to assist workers
73	73	42considering buying the business (D) Any price the Owner of the Qualified Business proposes for
74	74	43the business sale.
75	75	44 (ii) In the event a QEG does not purchase 100% of total ownership of the Qualified
76	76	45Business, such as where Owners or other parties retain or purchase a stake in the business, the
77	77	46provisions of this section shall apply only if the QEG holds the sole voting rights and decision-
78	78	47making power in the resulting business. Sales of the Qualified Business that include agreements
79	79	48infringing on this requirement for democratic governance by worker-owners shall nullify the
80	80	49benefits to the Owner from this section.
81	81	50 (iii) Any group of workers that is eligible to form a QEG has 30 days from the date the
82	82	51Owner’s notice was posted or upon the workers’ electronic receipt thereof, to signal in writing
83	83	52via registered mail to the Owner their intent to compete to buy the Qualified Business, and list all
84	84	53members of the QEG. The Owner shall immediately make available any financial records
85	85	54necessary for evaluating the health and value of the business, following the signing of a non- 4 of 5
86	86	55disclosure agreement between the Owner and the QEG. If after 30 days no QEG has signaled
87	87	56interest in a purchase, the Owner shall be free to sell the business as they choose.
88	88	57 (iv) From the date any QEG signals intent to buy the business, the Owner and the
89	89	58applicable QEG shall have 180 days to have the value of the business assessed by a qualified
90	90	59independent business valuation consultant agreed by the Owner and the QEG, and to reach
91	91	60agreement on a price; or alternatively if a competitive good-faith offer is made by a third party,
92	92	61the QEG shall have the opportunity to match that offer.
93	93	62 (v) In the event the Owner and QEG reach a price that is substantially equivalent or
94	94	63superior to all other good-faith offers received on the open market within the 180-day period, the
95	95	64Owner shall be obligated to sell the business to the QEG. However, the highest bid need not be
96	96	65the winning bid, and the Owner may sell to a QEG for reasons other than preferring the highest
97	97	66bid.
98	98	67 (vi) In the event of a completed Qualified Business Sale, the Owner shall be exempted
99	99	68from obligation under Chapter 62 Section 4 of the General Laws, to pay the state capital gains
100	100	69tax on any gains from the sale of the Qualified Business under $1,000,000.00. Any gains from
101	101	70the sale of the Qualified Business over $1,000,000.00 shall continue to be subject to the relevant
102	102	71capital gains tax. In the event of a partial sale of the Qualified Business to the QEG, this
103	103	72exemption shall apply only to the proportion of the business being sold to the QEG.
104	104	73 (vii) All labor union membership or collective bargaining agreements existing prior to a
105	105	74Qualified Business Sale shall continue to be in effect under the new ownership structure.
106	106	75 (viii) Upon the completion of a Qualified Business Sale, the resulting business shall not
107	107	76be subject to external governance, decision-making or management influence from non-worker 5 of 5
108	108	77or non-member parties, including non-member shareholders or outside investors. Any contract
109	109	78enabling control of the company by outside investors shall not be in compliance with this
110	110	79section.
111	111	80 (ix) In the event that the Owner of a Qualified Business fails to comply with the terms of
112	112	81this Section, the QEG shall have the right to demand a court injunction to stop such improper
113	113	82sale and require compliance with this Section.