• Many companies are already using steward-ownership models. But you're advocating for a new legal form for it. Why is a political solution even necessary?

Carla: Current steward-ownership implementations, many of them depicted in this book, are often what we call "legal hacks." They're essentially workarounds, using existing legal structures in ways that weren't really intended for this purpose.

Many companies invest significant time and money to establish these, especially those forming their own foundations or trusts. While some countries, like Denmark, have liberal foundation laws that work, in many other places, foundations are complex and costly. There's a general rule of thumb that a foundation structure in Germany only really makes sense for companies with over 30 million in revenue and/or more than 300 employees; lawyers often advise smaller companies against it - that means for 95 percent of the German enterprises steward-ownership is legally prohibitively costly.

Veto-share models, like the one offered by the Purpose Foundation, represent a good option to transition to steward-ownership in the absence of appropriate legal forms, but often come with legal uncertainties due to them being created as work-arounds. Besides companies using such a solution have to transfer a part of their business to an external entity. This external transfer of legal ownership is psychologically challenging for many business owners.

 

• So you're campaigning for a new legal structure, and you've actually managed to get it included in the German federal government's coalition agreement not once, but twice! The new German CDU/CSU and SPD government announced in their coalition agreement: "We… want to introduce a new, independent legal form: 'Company with tied assets.' The characteristics of this legal form are an unalterable capital lock and a membership logic ”that provides for entry and exit independent from descendance or financial resources,” without any tax privileges or discriminations." Was it hard to get to this point?

Well, I think what made it challenging is that a demand for an entirely new legal form isn't something that comes along every year. This is, at least in Germany, more like a once-in-a-century kind of project. Because of that, we're dealing with complex questions not only in terms of legal technique, but also in terms of legal and political culture. Even though we can refer and build on existing law to a substantial extent, what we're proposing doesn't really exist yet in German corporate law.

So, one aspect of our work is truly foundational: creating a new legal form that meets entrepreneurial needs while also fitting cleanly and legally soundly into the broader framework of German corporate law. We are incredibly lucky that a team of independent law professors has formed around Prof. Anne Sanders and, pro bono, developed a proposal for such a legal form at the request of the German parliamentary rapporteurs in the last legislative term.

The other side is the extensive outreach we do. We talk to many politicians and other individuals and organizations who were or still are completely unfamiliar with this concept - even though it is very successfully realized by famous companies as Zeiss, Bosch, Carlsberg and many more. A lot of our effort goes into "field-building," you could say, to really bring this topic into awareness, not just in academic discussions, but also in the political debate.

 

• So what are the key narratives you use in those conversations to make them understand the great value of steward-ownership by the end of the conversation?

We always start with the practical, business need, because that is exactly where we come from. It's crucial to convey that this isn't some academic theory, or ideology as some opponents try to spread; it's a real-world demand from businesses. We're seeing diverse types of companies, from startups to established players, who genuinely need this solution.

Many countries around the world are facing a massive succession wave. The traditional family succession model isn't working as it used to – only about a third of family businesses even plan for it, and even fewer actually achieve it. Steward-ownership offers a vital solution here. It allows these companies to preserve their independence, values, and professional cultures, even without a direct family successor. Voting rights can be passed on following the principle of capability independently of family lineage or financial status. For example, often there are very competent candidates among the employees, who could never afford to buy the company.

Opening up entrepreneurial succession in that way helps protect our decentralized German Mittelstand from closure or being sold off to large corporations or short-term oriented investors.

In fact, studies show that over 70% of companies surveyed support a legal form for steward-ownership as a succession option, and many can even imagine it for their own business. One cannot underestimate the urgency of this succession issue.

Because the businesses embracing and advocating for this concept are so varied, there are a lot of different angles to connect with politicians. Of course, you have many very traditional, small and mid-sized companies desperately looking to solve their succession planning challenges, and those cases connect more or less with everyone we talk to. Then, for example, we see very innovative digital companies, some of them even market-leaders in their field, that might be of special interest for certain politicians. Or you have companies with a strong sustainable focus, and their stories might resonate particularly well with other politicians.

 

 

• So, why should governments actually have a political interest in creating a solution for steward-ownership?

If you look at steward-ownership from the perspective of what governments might gain, it becomes pretty clear.

First off, it's fundamentally about preserving companies and jobs. I mean, just in Germany, we're looking at hundreds of thousands of businesses facing closure in the near future simply because they can't sort out their succession. So, it's literally about keeping businesses alive, protecting livelihoods, and maintaining these institutions that play such a vital role in people's lives – not just as consumers or employees, but as key parts of their culture and region.

Building on that, more businesses actually means more competition, right? If we want to keep our social market economy alive that is based on competition, then that competition needs to exist. And we see it eroding with increasing market concentration.

Also, if the alternative to closing isn't just closing, but selling, who's actually buying up German Mittelstand companies these days? There's not a lot of transparency, but we can observe a lot of money coming in from the US and China, leading to significant entrepreneurial power shifting out of Germany. It's not necessarily bad per se, but it definitely raises questions about how we want our economy to be structured long-term and who's making those decisions.

Then, there's the whole aspect of innovation and long-term investment. Supporting businesses that take a long-term view can actually free up more capital for innovation. Think about it: innovation isn't just happening in exit- or IPO-driven companies. Examples like Zeiss or Ecosia show that huge innovations can really thrive in a steward-owned setup. That asset lock attracts deeply intrinsically motivated innovators who aren't just thinking about shareholder value or quick exits.This also leads to incredibly extended investment horizons. Take Zeiss, for example, with their 30-40 year investment outlook.

 

• So, why should governments actually have a political interest in creating a solution for steward-ownership?

If you look at steward-ownership from the perspective of what governments might gain, it becomes pretty clear.

First off, it's fundamentally about preserving companies and jobs. I mean, just in Germany, we're looking at hundreds of thousands of businesses facing closure in the near future simply because they can't sort out their succession. So, it's literally about keeping businesses alive, protecting livelihoods, and maintaining these institutions that play such a vital role in people's lives – not just as consumers or employees, but as key parts of their culture and region.

Building on that, more businesses actually means more competition, right? If we want to keep our social market economy alive that is based on competition, then that competition needs to exist. And we see it eroding with increasing market concentration.

Also, if the alternative to closing isn't just closing, but selling, who's actually buying up German Mittelstand companies these days? There's not a lot of transparency, but we can observe a lot of money coming in from the US and China, leading to significant entrepreneurial power shifting out of Germany. It's not necessarily bad per se, but it definitely raises questions about how we want our economy to be structured long-term and who's making those decisions.

Then, there's the whole aspect of innovation and long-term investment. Supporting businesses that take a long-term view can actually free up more capital for innovation. Think about it: innovation isn't just happening in exit- or IPO-driven companies. Examples like Zeiss or Ecosia show that huge innovations can really thrive in a steward-owned setup. That asset lock attracts deeply intrinsically motivated innovators who aren't just thinking about shareholder value or quick exits.This also leads to incredibly extended investment horizons. Take Zeiss, for example, with their 30-40 year investment outlook.

They put money into technologies that took decades to develop, but which every chip producer needs today. We really shouldn't have a monoculture when it comes to fostering innovation; it happens in so many different places and so many different ways, and we shouldn't just be pushing one particular path. I mean, there are tons of non-exit startups out there already.

 

• Thanks. We've talked a lot about Germany. What about other countries? What can you tell us about global considerations and efforts regarding political demands for steward-ownership?

Right, so, up until now, the legal form project has been matured furthest in Germany. But we do see similar efforts emerging in other countries, like the Netherlands, for instance, where there are pushes to introduce their own independent legal forms for steward-ownership. We also know about first thoughts in this direction in Portugal and Greece. And the EU considers strengthening steward-ownership within the 28th regime. Steward-ownership is definitely not just a German topic, nor just a European. You find companies realizing Steward-Ownership with complex legal structures all over the world - so in the future we will likely see more similar initiatives elsewhere over the globe.

 

Thank you for your time and the interview, Carla!