{"id":3828,"date":"2017-04-27T15:18:17","date_gmt":"2017-04-27T19:18:17","guid":{"rendered":"https:\/\/www.stevenslee.com\/sesesop\/?p=3828"},"modified":"2026-07-21T15:20:11","modified_gmt":"2026-07-21T19:20:11","slug":"esop-legal","status":"publish","type":"post","link":"https:\/\/www.stevenslee.com\/sesesop\/resources\/esop-legal\/","title":{"rendered":"ESOP Legal"},"content":{"rendered":"<h4>In this article:<\/h4>\n<ul>\n<li>Who Are ESOP Fiduciaries, What Are Their Responsibilities, and How Do They Get Appointed?<\/li>\n<li>Who Votes the Shares Held in the ESOPs?<\/li>\n<li>Corporate Governance of ESOP Companies<\/li>\n<li>ESOP Legal Pitfalls<\/li>\n<\/ul>\n<h2 id=\"legal-fiduciaries\">Who Are ESOP Fiduciaries, What Are Their Responsibilities, and How Do They Get Appointed?<\/h2>\n<p>Any person with discretion over the management or administration of a plan, or who exercises any authority or control over plans assets, is a fiduciary under ERISA. The ESOP trustee, or any other person or committee designated in the plan documents as responsible for making investments in company stock, is a named fiduciary.<\/p>\n<p>ERISA requires that plan fiduciaries act prudently and solely in the interest of plan participants. Three of the most important responsibilities of an ESOP fiduciary are:<\/p>\n<ul>\n<li>Securing a proper valuation of the stock;<\/li>\n<li>Assuring that the interests of plan participants are protected in ESOP transactions; and<\/li>\n<li>Approving all purchases and sales of ESOP stock.<\/li>\n<\/ul>\n<p>SES ESOP Strategies provides expertise and support at every stage of the ESOP lifecycle.<\/p>\n<h2 id=\"legal-who-votes\">Who Votes the Shares Held in the ESOP?<\/h2>\n<p><a href=\"http:\/\/uscode.house.gov\/view.xhtml?req=(title:26%20section:409%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section409)&amp;f=treesort&amp;edition=prelim&amp;num=0&amp;jumpTo=true#substructure-location_e\" target=\"_blank\" rel=\"noopener noreferrer\">The Code<\/a>\u00a0requires that company stock in the ESOP must have full voting rights. In non-public ESOP companies, voting rights on shares allocated to ESOP accounts must be passed through to ESOP participants for votes on major corporate matters such as a merger or consolidation, recapitalization, reclassification, liquidation, dissolution, or sale of substantially all of the assets of the corporation.<\/p>\n<p>Unallocated shares, and allocated shares voting on other matters (such as the election of the Board of Directors), may be voted by a named fiduciary, or as otherwise designated in the plan.<\/p>\n<p>Some ESOPs pass through voting to participants on all matters, or provide for proportional voting for all shares held in the ESOP (both allocated and unallocated shares) on the basis of one vote per participant.<\/p>\n<p>SES ESOP Strategies provides expertise and support at every stage of the ESOP lifecycle.\u00a0<a href=\"https:\/\/sesesop.com\/contact\/\">Please contact us to learn more<\/a>.<\/p>\n<h2 id=\"legal-corporate-governance\">Corporate Governance of ESOP Companies<\/h2>\n<p>Without the founding entrepreneur steering the ship, ESOP companies\u2019 corporate governance is of paramount importance. SES ESOP Strategies can help you understand the roles of trustees, directors and officers, how corporate governance affects value, and best practices for corporate governance in ESOP companies.<\/p>\n<h2 id=\"legal-pitfalls\">ESOP Legal Pitfalls<\/h2>\n<p>Whether you have recently adopted an ESOP, have been an ESOP company for years, or are now looking to <a href=\"https:\/\/sesesop.com\/implementation-process\/\">implement an ESOP<\/a> transition strategy, <a href=\"https:\/\/sesesop.com\/service\/esop-legal-services\/\">our legal services<\/a> can help you identify \u2013 and avoid \u2013 common red flags in your ESOP transaction documentation and plan operation.<\/p>\n<p><a href=\"https:\/\/sesesop.com\/contact\/\">Contact SES ESOP today<\/a>.<\/p>\n<h3>Learn More:<\/h3>\n<h3><a href=\"https:\/\/sesesop.com\/esop-knowledge-center\/esop-legal\/esop-fiduciary-committees\/\">ESOP Fiduciary Committees<\/a><\/h3>\n<p>Co-authored by Jim Steiker, this article reviews the legal standards that govern ESOP committees. Published 2004 in the Journal of Employee Ownership Law and Finance Is an ESOP right for your company? Use our ESOP self-assessment tool to find out. Explore various Ownership Transition Options or replay our Introduction to ESOPs webinar.<\/p>\n<p><a href=\"https:\/\/sesesop.com\/esop-knowledge-center\/esop-legal\/esop-fiduciary-committees\/\">Read More<\/a><\/p>\n<h3><a href=\"https:\/\/sesesop.com\/esop-knowledge-center\/esop-legal\/esop-participants-and-shareholder-rights\/\">ESOP Participants and Shareholder Rights<\/a><\/h3>\n<p>Jim Steiker wrote this chapter from the book \u201cESOPs and Corporate Governance.\u201d Is an ESOP right for your company? Use our ESOP self-assessment tool to find out.<\/p>\n<p><a href=\"https:\/\/sesesop.com\/esop-knowledge-center\/esop-legal\/esop-participants-and-shareholder-rights\/\">Read More<\/a><\/p>\n<h3><a href=\"https:\/\/sesesop.com\/esop-knowledge-center\/esop-legal\/legal-update\/\">Legal Update<\/a><\/h3>\n<p>Steve Greenapple addresses breach of fiduciary duty and federal common law fraud by participants who transferred their 401(k) account balances to an ESOP, against the sponsor of the Plans, fiduciaries of the Plans and the ESOP\u2019s financial advisor.<\/p>\n<p><a href=\"https:\/\/sesesop.com\/esop-knowledge-center\/esop-legal\/legal-update\/\">Read More<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article: Who Are ESOP Fiduciaries, What Are Their<span class=\"excerpt-hellip\"> [\u2026]<\/span><\/p>\n","protected":false},"author":46,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_exactmetrics_skip_tracking":false,"footnotes":""},"categories":[18],"tags":[],"class_list":["post-3828","post","type-post","status-publish","format-standard","hentry","category-resources"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>ESOP Legal - SES ESOP Strategies<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.stevenslee.com\/sesesop\/resources\/esop-legal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"ESOP Legal - SES ESOP Strategies\" \/>\n<meta property=\"og:description\" content=\"In this article: Who Are ESOP Fiduciaries, What Are Their [\u2026]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.stevenslee.com\/sesesop\/resources\/esop-legal\/\" \/>\n<meta property=\"og:site_name\" content=\"SES ESOP Strategies\" \/>\n<meta property=\"article:published_time\" content=\"2017-04-27T19:18:17+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-07-21T19:20:11+00:00\" \/>\n<meta name=\"author\" content=\"tjgivens\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"tjgivens\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/\"},\"author\":{\"name\":\"tjgivens\",\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/#\\\/schema\\\/person\\\/3955d0bd14f01445a132248eff2d400b\"},\"headline\":\"ESOP Legal\",\"datePublished\":\"2017-04-27T19:18:17+00:00\",\"dateModified\":\"2026-07-21T19:20:11+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/\"},\"wordCount\":559,\"publisher\":{\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/#organization\"},\"articleSection\":[\"Resources\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/\",\"url\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/\",\"name\":\"ESOP Legal - SES ESOP Strategies\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/#website\"},\"datePublished\":\"2017-04-27T19:18:17+00:00\",\"dateModified\":\"2026-07-21T19:20:11+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/resources\\\/esop-legal\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"ESOP Legal\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/#website\",\"url\":\"https:\\\/\\\/www.stevenslee.com\\\/sesesop\\\/\",\"name\":\"Griffin Financial Group\",\"description\":\"TAILORED ESOP SOLUTIONS. 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