The Code requires 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.
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.
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.
SES ESOP Strategies provides expertise and support at every stage of the ESOP lifecycle. Please contact us to learn more.