What is an Employee-owned Company?

Learn all the details about this specific type of company

Employee-owned companies are publicly traded companies or limited liability companies that are subject to the precepts established in the Law on Employee-owned and Investee Companies.

Public limited companies or limited liability companies can achieve the rating of «Employee-owned company » if they fulfill the following requirements:

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a) Most of the capital stock must be owned by workers who personally and directly do remunerated work in the company with an indefinite contract.

b) None of the members may be the holder of stock or company shares representing more than one-third of the capital stock, unless:

  • The employee-owned company is made up initially of two worker-members with an indefinite contract where the capital stock and the voting rights of the company are distributed equally among the two with the requirement that, within a maximum period of 36 months, they conform to the limits set in this section.
    • The members are public entities, have mainly public shareholders or are nonprofit companies or companies from the social economy, in which case, one shareholder may surpass the above-mentioned limit yet remain below fifty percent of the capital stock.
    • In the event of a breach in the limits set out in sections a) and b) of this article, the company will be legally obligated to rectify the situation of its members within eighteen months from the first instance of non-compliance.

c) The number of hours worked per year by the non-shareholder workers contracted for an indefinite period cannot be higher than forty-nine percent of the total hours worked per year by the worker-members in the employee-owned company. Work carried out by disabled workers with a degree of disability equal to or more than thirty-three percent do not figure into this calculation.

If the limits established in this section are surpassed, the company must demonstrate compliance within a maximum period of twelve months. The body supervising the Employee-Owned Companies Registry may grant up to two extensions, for a maximum period of twelve months each, provided that the violating company proves in each extension request that it has made progress in adjusting to the established limits. The adjustment period in the case of statutory or conventional subrogation will be thirty-six months, where the same additional extensions discussed in this section may be requested.

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The name of the company will feature the indication «Sociedad Anónima Laboral (Employee-Owned Publicly Traded Company)», «Sociedad de Responsabilidad Limitada Laboral (Employee-Owned Limited Liability Company)», or «Sociedad Limitada Laboral (Employee-Owned Limited Company)» or by their abbreviations SAL, SRLL or SLL, where applicable.

The adjective «employee-owned» may not be included in the names of companies that are not qualified as an «Employee-Owned Company».

The designation «employee-owned» must appear in all documentation, correspondences, order sheets and invoices, as well as in all announcements published in accordance with legal or statutory provision.

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