THE ESOP ASSOCIATION
Adequate Consideration Resource Center
Adequate Consideration Regulation for ESOPs
On Thursday, January 16, the Biden Administration’s Department of Labor revealed a draft of a long-awaited adequate consideration regulation for ESOPs. However, while the DOL made the draft regulation public, it was not set to be officially published in the Federal Register until January 22, two days after President Donald Trump’s inauguration on January 20.
One of President Trump’s first actions on January 20 was an Executive Order withdrawing any rules sent to, but not yet published by, the Federal Register. This action meant that the Biden DOL’s draft adequate consideration rule, and the accompanying draft of a safe harbor exemption, are withdrawn and will be revisited by the new Secretary of Labor, the new head of EBSA, and other appointed White House staff.
The ESOP Association has developed a series of analyses, overviews, policy papers and other communications to help our members stay informed about the adequate consideration issue. Some of our most helpful resources are listed below. Please note that comments and statements do not represent final conclusion or analysis and does not constitute legal advice.
If you would like to be kept informed of the latest developments on this and other issues related to legislation, regulation, and ESOP advocacy, please join the Employee Ownership Action Network (EOAN). It’s free to join and you will receive real-time alerts on policy issues impacting ESOPs.
Resources

An Overview and TEA's Next Steps
An overview of the draft adequate consideration rule, including information on the rulemaking process, highlights of the rule, current state of play, and The ESOP Association’s next steps.

TEA’s Proposal for a U.S. Department of Labor Regulation Regarding the Definition of Adequate Consideration
The model regulation on adequate consideration developed by The ESOP Association and shared with the Biden and Trump Administrations and Congress.

Comparison of TEA and Biden/DOL Adequate Consideration Proposals
The ESOP Association’s side-by-side comparison of the Biden DOL draft regulation with our model regulation.

Regulatory Clarity from Department of Labor on Adequate Consideration
The ESOP Association’s policy paper on adequate consideration.

Proposed Regulation Relating to Application of the Definition of Adequate Consideration
The full draft of the Biden Department of Labor’s proposed safe harbor exemption that was made public on January 16 but withdrawn on January 20 by Executive Order.

Proposed Safe Harbor Class Exemption For Initial Acquisition of Employer Common Stock by ESOPs from Selling Shareholders
The full draft of the Biden Department of Labor’s proposed adequate consideration rule that was made public on January 16 but withdrawn on January 20 by Executive Order.

The ESOP Association Provides Model Regulation Language for U.S. Department of Labor Rulemaking Defining Adequate Consideration
Press Release: Framework Provided to Dept. of Labor, Congress, and White House as a Model for Fair, Transparent Regulation to Grow ESOPs While Safeguarding Employee Interests

TEA's Transmittal Letter
Regulatory Proposal For Adequate Consideration Exemption Under the Employee Retirement Income Security Act of 1974 (“ERISA”)