Payouts for the many over the few: Employee ownership trusts take shape in Canada

Three times a year, the 600-or-so employees of Friesens Corp. gather in front of the publishing house to accept envelopes, each one holding a cheque for the workers' share of company profits.

Three times a year, the 600-or-so employees of Friesens Corp. gather in front of the publishing house to accept envelopes, each one holding a cheque for the workers' share of company profits.

They all get a cut because they're all owners.

The company based in the small town of Altona, Man. is set up as an employee ownership trust, which, just like it sounds, is a way to set up ownership of a business for the benefit of employees.

It's also a way for a business owner to cash out without having to sell to a competitoror private equity, and it'smuch more likely in Canada after the federal government passed new rules and incentives for it in June.

The option has added importance because about three-quarters of small business owners plan to exit their company over the next decade, according to a Canadian Federation of Independent Business poll released last year, creating the need for more succession choices.

"It doesn't matter if you're a rich white kid from down the street, or a newcomer from the Philippines that just arrived with their family, you have equal participation in our ownership program," said Chad Friesen, chief executive of Friesens Corp.

Unlike a model where a few wealthier employees outright buy the business, employee ownership trusts are structured in a way that the workers don't have to put up money, and don't own shares directly, making for a much wider potential distribution of the benefits.