Partial or full sales of businesses, as well as mergers, often give rise to critical questions in steward-ownership: Is it possible to sell a company? Can assets be sold? And what happens to the proceeds?
One of the core promises of (legally binding) steward-ownership is that the sale of a business purely for the personal financial gain of its owners is categorically excluded. Proceeds from business (partial) sales remain bound within the purpose-locked assets and cannot be privately extracted. Instead, these proceeds must either be reinvested or donated to charitable causes. Reinvestment can also include channeling the proceeds into another steward-owned company (e.g., in the case of establishing a new business).
In all steward-ownership models, decisions regarding asset sales or the sale of the entire business rest with the stewards. Depending on the structure, these (critical) decisions may also require the approval of the oversight shareholders (e.g., in a veto-share model), other stakeholders such as investors, or nonprofit entities (as seen in foundation-based models).
In the context of business sales, two forms are distinguished: asset deals and share deals.
Asset deals, which involve selling individual assets of a company such as machinery or trademark rights, are possible within steward-ownership models. Asset deals are possible within the various models of steward-ownership. The concept of steward-ownership does not inherently require an inflexible attachment of individual assets or economic goods to the company. The key is that the proceeds from an asset deal remain bound and are used within the constraints of asset lock (i.e. are either reinvested or donated).
In the veto-share model, selling assets requires the approval of the oversight or veto shareholder. This approval ensures the sale price is fair and market-consistent, securing that an adequate value remains bound within the company.
In foundation-based models, whether and under what conditions significant company assets can be sold depends on the specific design of the model. Generally, foundation structures ensure that key company assets cannot be sold at all, or only with high approval thresholds – sometimes requiring 100% of voting rights. Many foundation statutes also specify that an asset deal decision must be economically necessary.
Companies in steward-ownership can have subsidiaries (for example, within holding structures) that are not themselves steward-owned, but are structured with an asset lock through their relationship to the parent company. The shares of these subsidiaries are considered assets of the parent company and can thus be sold, with the proceeds bound within the asset lock of the parent company.
In a share deal, the entire company is sold by selling all its shares. In steward-ownership, this is typically prohibited or limited to exceptional cases. The legal safeguards of an asset lock ensure that the people making the decision to sell (the stewards) cannot personally profit from the sale, and any proceeds must be reinvested or donated.
In a veto-share model, selling the entire company is effectively excluded by the veto rights of the oversight shareholder. If there is no other entrepreneurial solution to preserve the company, some veto-share providers might agree to a share sale under certain conditions.
In foundation-based models, the sale of the entire company is generally only allowed in extreme emergencies and is subject to high approval thresholds. The proceeds usually go to a charitable entity.
In a share deal, the entire company is sold by selling all its shares. In steward-ownership, this is typically prohibited or limited to exceptional cases. The legal safeguards of an asset lock ensure that the people making the decision to sell (the stewards) cannot personally profit from the sale, and any proceeds must be reinvested or donated.
In a veto-share model, selling the entire company is effectively excluded by the veto rights of the oversight shareholder. If there is no other entrepreneurial solution to preserve the company, some veto-share providers might agree to a share sale under certain conditions.
In foundation-based models, the sale of the entire company is generally only allowed in extreme emergencies and is subject to high approval thresholds. The proceeds usually go to a charitable entity.
In a share deal involving individual shares, a company can sell parts of itself while maintaining the core principles of steward-ownership. The key is that the stewards must retain control of a majority of the voting rights, which are not sold for profit or inherited.
In a veto-share model, the sale of individual shares with both voting and profit rights is generally not permitted. An exception can be granted, but it usually comes with several steps of approval.
In foundation-owned companies, share deals are possible but come with strict approval requirements. For example, Danish foundation-owned companies sometimes allow shares with voting and profit rights to be held in free float, but their statutes set a clear limit on how many of these can be distributed to external parties.
When steward-owned companies merge, be it forming a new company or joining an existing one, the core principles must be preserved. This means that the company receiving the assets must also be steward-owned.
A steward-owned company cannot merge with a non-steward-owned entity without an additional approval process and a formal change in its articles of association.
For investors, it is important to understand that steward-ownership offers flexibility. Companies can sell assets or even the entire company while keeping the capital locked within the business. This allows for strategic moves like raising liquidity to buy back investor shares.
What is crucial is that capital providers do not have control over the decision of whether assets or the entire company should be sold. However, they can still be granted rights, such as the ability to block a sale to prevent mission drift. The specific rules for sales and mergers depend on the steward-ownership model and the legal structure chosen.
In conclusion, all steward-ownership models ensure that a company's assets are dedicated to its purpose. While not all sales or mergers are excluded, these transactions are possible only under specific conditions.
Steward-ownership thus provides ample room for entrepreneurial agility when needed, it does not stand in the way of strategic business realignments and does not tie up capital in an economically inefficient manner for specific purposes. The goal of steward-ownership is not to prevent sensible sales and restructurings, but to exclude speculation and sale dynamics driven purely by private interests.