What responsibility doest he business have to ESOP members?

[Guest stockholder]

I belong to an ESOP and have asked several questions to management about accountability. Does the business have any legal obligation to report on business activities to ESOP members (i.e.,stockholders)? In light of the ENRON fiasco, I feel that the response of "information is given on a need-to-know" basis is not only offensive, but perhaps even illegal. Any comments or ideas?

Thanks!

[MGB]

The answers are different depending on whether your company is publicly traded or not. If it is publicly traded, then you should only have access to the same information that an outside stockholder has. It would be illegal for the company to provide you with additional information that has not been given to the public. If you are a non-traded company, then I do not know what the reporting requirements are...someone else may know. I would guess that it is the same information that needs to be given to stockholders if it was a traded company.

[RLL]

If the ESOP company is closely-held, ESOP participants are NOT entitled to the information that the company provides to shareholders. ERISA only requires that ESOP participants be given the same information that is provided to participants of any retirement plan. This does NOT include information regarding the company's financial condition or business activities.

ESOP participants are not direct shareholders of the company and are not entitled by law to be treated as shareholders or given the information provided to shareholders. They are indirect shareholders through their status as participants in an employee benefit plan which owns company stock. Most ESOP companies, however, have chosen to provide ESOP participants with some information regarding business activities and financial condition even though the law does not so require.