Assembly Commerce and Economic Development Committee Statement to Assembly, No. 5016 (June 4, 2026)

Summary

Statement to Assembly, No. 5016, from the Assembly Commerce and Economic Development Committee of the State of New Jersey, dated June 4, 2026, reporting Assembly Bill No. 5016 favorably. The statement says the bill requires the New Jersey Economic Development Authority (EDA) to establish an "Employee Ownership Transition Program," designate a Director of Employee Ownership, and establish an Advisory Commission on Employee Ownership consisting of 13 members. It states that the EDA would provide financial assistance equal to the lesser of 90 percent of pre-approved feasibility study costs or $35,000, and would establish an "Employee Ownership Revolving Loan Fund" for low-interest loans.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                          STATEMENT TO

                     ASSEMBLY, No. 5016

       STATE OF NEW JERSEY
                             DATED: JUNE 4, 2026

          The Assembly Commerce and Economic Development Committee
      reports favorably Assembly Bill No. 5016.
          As reported, this bill requires the New Jersey Economic
      Development Authority (EDA) to establish an “Employee Ownership
      Transition Program” (program) to provide financial assistance and
      educational resources to encourage businesses to explore transitioning
      their ownership structure to an employee ownership model and to
      provide educational resources to businesses about employee ownership
      models. Additionally, this bill requires the EDA to designate a
      Director of Employee Ownership to administer the program and to
      establish an Advisory Commission on Employee Ownership to advise
      the EDA on strategies to encourage and expand employee ownership
      in the State.

      Employee Ownership Transition Program
          The purpose of the program would be to encourage businesses to
      explore transitioning to employee ownership models and provide
      educational resources about employee ownership models. The bill
      defines “employee ownership model” to mean an arrangement in
      which a business’s employees own shares in the business or the right
      to the value of shares in the business. Employee ownership models
      include, but are not limited to: employee stock ownership plans;
      worker cooperatives; employee ownership trusts; direct employee
      ownership; stock options; stock grants; synthetic equity; and any other
      broad-based employee ownership structure.
          Under the program, the EDA would provide the following
      services: (1) financial assistance to support the payment of eligible
      contractors for the provision of employee ownership feasibility study
      services for eligible businesses; (2) consultative services to businesses
      that have elected to transition to an employee ownership model
      following the completion of a feasibility study; (3) information and
      educational services and resources about employee ownership models
      for employees and employers, made available on the EDA’s Internet
      website; (4) outreach services to businesses, in partnership with
      educational institutions concerning the advantages and implementation
      of employee ownership models generally; (5) encouragement of
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businesses in this State to consider and transition to employee stock
ownership plans and other variations of employee ownership models;
(6) educational services, outreach services, and early-stage technical
assistance concerning employee ownership models to businesses,
including small or start-up business with fewer than 20 full-time
employees that may be years away from a succession decision, to help
such businesses proactively incorporate employee ownership into their
growth and succession planning; and (7) loan financing and other
financial tools to support employee ownership transitions, including
through the Employee Ownership Revolving Loan Fund established
under the bill.
    A contractor that seeks to provide employee ownership feasibility
study services under the program would be required to apply to the
EDA to participate in the program. As part of its application, an
applicant would be required to provide: (1) proof that the applicant is
experienced in employee ownership transitions; (2) evidence regarding
the qualifications and experience of the applicant in designing and
developing feasibility studies and valuations; and (3) information
regarding the ability of the contractor to complete the scope of work
expected for employee ownership feasibility study services under the
program. Upon approval of an application, the EDA would enter into
a contract with the contractor to provide employee ownership
feasibility study services for eligible businesses under the program.
    Under the program, an eligible business may apply to the EDA for
assistance in defraying the costs of employee ownership feasibility
study services. Employee ownership feasibility study services are
defined under the bill to include an in-depth, written assessment of the
business’s potential and viable outcomes in transitioning to an
employee ownership model, informed by the business owner’s desired
objectives in exploring an employee ownership model, based on
certain measures listed in the bill.
    Upon approval of an application, the EDA would notify the
eligible business and facilitate communication between the eligible
business and an eligible contractor. As part of this initial coordination,
the EDA would require that the eligible business and eligible
contractor conduct at least one meeting to discuss the characteristics of
the eligible business and the objectives of the employee ownership
feasibility study services. After this meeting, the eligible contractor
would provide the EDA and the eligible business with an itemized
electronic invoice for employee ownership feasibility study services to
be completed.
    Prior to the EDA, eligible business, and eligible contractor entering
into a written agreement for employee ownership feasibility study
services, the EDA would be required to certify the amount of financial
assistance to be paid by the EDA to the eligible contractor and the
amount of the payment to be paid by the eligible business. Under the
program, the EDA would provide financial assistance to the eligible
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contractor in an amount equal to the lesser of 90 percent of the pre-
approved services costs of the employee ownership feasibility study
services or $35,000.
    For purposes of supporting the program, the EDA would be
required to establish and maintain the “Employee Ownership
Assistance Fund.” The EDA is required to maintain the fund to
support the program, including the provision of financial assistance to
defray the costs of employee ownership feasibility study services
conducted by eligible contractors and the provision of education,
outreach, and technical assistance to businesses in accordance with the
purposes set forth in the bill. This fund would be credited with such
monies as may be appropriated or made available to the EDA for the
purpose of the fund and any return on investment of monies deposited
in the fund.
    Currently, the EDA administers the “Employee Stock Ownership
Plan Assistance Program” that provides partially covered employee
stock ownership plan feasibility study services for New Jersey
businesses that are interested in transitioning to employee-owned
businesses. This bill seeks to codify and expand this program.
Additionally, under this bill, any eligible contractors that are approved
under the existing program would automatically qualify as eligible
contractors for the “Employee Ownership Transition Program.”

Director of Employee Ownership
    The bill requires the EDA to designate an employee of the
authority or appoint a qualified individual to serve as the Director of
Employee Ownership, who would report directly to the Chief
Executive Officer of the EDA. Qualifications for the role of director
include training or experience in employee ownership, business
succession planning, economic development, workforce development,
or corporate finance.
    The director would be responsible for administering the Employee
Ownership Transition Program established by this bill. The director
would be required to: (1) administer the program; (2) serve as the
State’s liaison for implementing employee ownership models,
including coordinating with businesses, lenders, professional advisors,
labor organizations, and employee ownership resource organizations;
(3) supplement the program through the use of any other financial
tools and products made available by the EDA for employee
ownership, business retention, succession, and wealth-building; (4)
develop and implement strategies to increase awareness of employee
ownership models among business owners, employees, and
community stakeholders; and (5) advise the EDA and the Advisory
Commission on Employee Ownership, also established under the bill,
of any proposed changes to the program that would be necessary to
expand the number of, and diversity of, employee-owned businesses in
the State.
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Advisory Commission on Employee Ownership
     The bill establishes an Advisory Commission on Employee
Ownership. The commission would be advisory to the EDA and the
Director of Employee Ownership, also established under the bill.
     The commission would be required to advise the EDA and the
Director of Employee Ownership on strategies to expand employee
ownership models in the State and make recommendations regarding
program design, outreach, and metrics for success, including the use of
financial tools to encourage employee ownership transitions.
     The commission would consist of 13 members, as follows: (1) the
Chief Executive Officer of the EDA, or the chief executive officer’s
designee; (2) the Commissioner of Labor and Workforce
Development, or the commissioner’s designee; (3) the State Treasurer,
or the State Treasurer’s designee; and (4) 10 public members, who
would be appointed by the Governor.
     The 10 public members of the commission would consist of: (1)
one representative of Rutgers, The State University of New Jersey,
from the Institute for the Study of Employee Ownership and Profit
Sharing; (2) one representative of the New Jersey/New York Center
for Employee Ownership, who would be appointed upon the
recommendation of the Executive Director of the New Jersey/New
York Center for Employee Ownership; (3) one executive officer of an
employee‑owned business located in this State; (4) one employee of an
employee-owned business in the State; (5) one representative of a
labor organization; (6) one representative of a financial institution or
fund that finances employee ownership transitions; (7) one individual
who serves or has served as a fiduciary or trustee for an employee
stock ownership plan or employee ownership trust; (8) one
professional advisor with experience in employee ownership
transitions, including transitions to cooperative or trust structures; and
(9) two public members with expertise in economic development,
employee ownership, community wealth‑building, or small business
assistance.
     Under the bill, the commission would be required to meet at least
four times each year. A chair and vice-chair would be selected by the
members of the commission from among its members. Seven
members would constitute a quorum for purposes of transacting
business, regardless of any vacancy on the commission. Under the
bill, a public member would be appointed to the commission for four
years, except that of the first members appointed, three would be
appointed for a term of two years, three would be appointed for a term
of three years, and four would be appointed for a term of four years.
Public members would be appointed by the Governor with the advice
and consent of the Senate and would be eligible for reappointment.
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Employee Ownership Revolving Loan Fund
    The bill requires the EDA to establish a non-lapsing revolving loan
fund, to be known as the “Employee Ownership Revolving Loan
Fund,” to provide low-interest loans to support employee ownership
transitions.
    Under the bill, the EDA may issue low-interest loans from the
revolving loan fund to eligible businesses, participating businesses,
and any other entities determined to be appropriate by the EDA, for
the purpose of facilitating:       (1) majority employee ownership
transitions; and (2) reasonable transaction-related and post-transition
needs that support the long-term sustainability of an employee-owned
business. An eligible business, participating business, or other entity
authorized by the EDA would be required to submit an application for
a low-interest loan to the EDA and, upon approval of this application,
enter into a loan agreement with the EDA. This loan agreement would
include the following terms: underwriting criteria; maximum loan
amounts; interest rates; repayment terms; permitted uses of proceeds;
and any reporting requirements determined by the EDA.
    Under the bill, the revolving loan fund may be credited with
monies received by the EDA from various sources, including State
appropriations, federal funds, charitable contributions, internal
transfers, and investment returns.
    The bill also provides that the EDA may use no more than five
percent of the total amount of interest or other charges received each
year in connection with issued loans to offset the administrative costs
of operating the revolving loan fund.


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