DOL Releases Two Proposed Rules on the Valuation of ESOP Shares
At 8:45 am Eastern time on January 16, the Federal Register released the public inspection versions of two proposed rules, both of which would affect the determination of the value of shares in ESOP transactions. Both proposed rules are from the Employee Benefits Security Administration (EBSA) at the Department of Labor (DOL).
- Proposed Regulation Relating to Application of the Definition of Adequate Consideration
- Safe Harbor Class Exemption: Initial Acquisition of Employer Common Stock by Employee Stock Ownership Plans from Selling Shareholders
Both proposed regulations are currently available as unpublished public inspection documents, and both are expected to be officially published on January 22. The Federal Register includes the disclaimer that, for unpublished public inspection pages like the above, “Although we make a concerted effort to reproduce the original document in full on our Public Inspection pages, in some cases graphics may not be displayed, and non-substantive markup language may appear alongside substantive text…. Only official editions of the Federal Register provide legal notice of publication to the public and judicial notice to the courts.”
Both proposed rules call for a 75-day comment period, starting on the date of their official publication in the Federal Register. If published as expected, the comment period for both will end on April 7, 2025.
EBSA simultaneously released a Fact Sheet: Notice of Proposed Rulemaking Relating to Application of the Definition of Adequate Consideration.
The NCEO and many others have begun reading these rules and will provide comments and observations as we do. Your own comments and observations are welcome—please send them to Nan Fitzgerald (NFitzgerald@nceo.org) with the subject line “Input on proposed rules.”