Business owners reviewing their business succession plan might consider a new stewardship trust adopted by the Oregon Legislature during its 2019 session. The legislation, HB 2598, effective January 1, 2020, provides a structure and guidance for businesses that desire to transition to steward-ownership to protect a company’s mission and values in the long term.
Under steward-ownership, the trust will hold the business – whether it be a corporation, limited liability company, partnership, joint venture, or other entity type. The stewardship trust’s business purpose may include financial and non-financial benefits. This structure helps a business preserve the goals and values of its original owners long after the owners retire or are no longer active in the business. Under this structure, the business management team is able to focus on both the business’s purpose and profit.
One mission-driven business that was instrumental in the development of the Oregon stewardship trust statute, and an early adopter of steward-ownership, is Eugene-based Organically Grown Company. In her article, “The Oregon Stewardship Trust: A New Type of Purpose Trust that Enables Steward-Ownership of a Business,” University of Oregon School of Law Professor Susan Gary explores the development of the Oregon stewardship trust and discusses how Organically Grown Company transitioned from co-op, to S-corporation, to steward-ownership. Professor Gary’s article is available at https://ssrn.com/abstract=3426845.