By Jon Shell | Part of our Special Series: The Ownership Solution | This piece first appeared in TheFutureEconomy.ca
Canada is getting used to standing more proudly on its own two feet since our longest-standing ally launched an economic war against us. At this trying moment, Canadians are asking how we protect our sovereignty, make life more affordable for workers and families and build a stronger, more resilient economy for the long term.
One practical answer is already on the books: the Employee Ownership Trust.
Right now is the right moment for Canada to rethink who owns and benefits from our country’s most productive assets. Because if we don’t, we will continue to see viable Canadian companies sold to foreign buyers looking to control our resources—like a conveyor belt moving local success stories out of Canadian hands.
Employee Ownership Trusts, or EOTs, offer a different business succession option that keeps companies rooted in the communities in which they were built. Established in 2024, the EOT allows business owners to sell to a trust that holds shares on behalf of employees. Owners receive full market value paid out of future profits, while workers become employee-owners, without having to invest their own savings.
This model protects Canadian sovereignty by anchoring firms at home. Every EOT sale keeps ownership rooted in Canada, with that firm’s long-term success becoming directly tied to the well-being of its workforce and the community where it operates. It makes life more affordable for workers by helping them build real wealth—in some cases, the first meaningful ownership stake they’ve ever had. And it strengthens the broader economy: research shows employee-owned firms deliver an 8-12% productivity boost, are more likely to survive economic downturns and less likely to lay off workers during recessions.
These outcomes have been proven over decades in the United States and the United Kingdom. Both countries encourage employee ownership with all-party political support and substantial government incentives that spur on their success.
The US now has more than 6,000 employee-owned companies generating over $2 billion in worker wealth, while the UK’s EOT has created new income streams for more than 335,000 workers across nearly 2,500 firms. While it will take some time for Canada to get to that level of adoption, economist Brett House has projected that Canada could eventually see more than 100 new EOTs per year, if the right policy conditions are in place.
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New research on the Big Banks and the businesses left behind
The productivity, resilience, inclusive growth and economic sovereignty objectives Canada is trying to achieve are not independent of its financing system. Canada ranks second-worst in the G7 as a place to be an entrepreneur, with 55 per cent of small-business owners saying they would not recommend starting a business here right now. A new SCP report by Michelle Arnold argues that this is not a reflection of the limits of our entrepreneurs, but the limits of our lenders - when it comes to SME financing, what the Big Banks can do is limited by how they're structured. If we want a stronger economy that works for workers, communities and small businesses, we need a financial system diverse enough to serve them.
Built to Exclude: Why Canada’s enterprises need a different kind of financing | Report
Canada's enterprise financing system is dominated by big banks that control 93% of banking assets and nearly 80% of SME lending. While stable and respected, they have structural constraints—minimum deal sizes, rigid credit models, collateral requirements—that systematically stop them from lending to a range of viable businesses. The SMEs left behind include businesses looking for small loans, seasonal enterprises, non-profits, cooperatives and rural firms. If we continue to undercapitalize SMEs trying to get off the ground or grow, this will have cascading economic and social consequences. Canada needs alternative financing institutions that operate alongside commercial banking as permanent, scaled infrastructure.
👏 Letting the big W sink in
In the Spring Economic Update, the federal government moved to make the legislative structure and tax incentive for Employee Ownership Trusts (EOTs) permanent. This is amazing news! At Social Capital Partners, we are grateful that the government has made these changes. Thanks to Prime Minister Mark Carney, François-Philippe Champagne and Ryan Turnbull for understanding the importance of employee ownership. This and more all in one funny-but-factual biweekly read.