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