The Workers’ Ownership Cooperative Act (ZLZD) Promotes Employee Ownership in Companies
The Workers’ Ownership Cooperative Act (ZLZD) Promotes Employee Ownership in Companies
November 2025
Bostjan Spec, Partner, and Domen Humar, Student
Selih & partnerji
On 23 October 2025, the National Assembly adopted the Workers’ Ownership Cooperative Act (“ZLZD“), which will enter into force on 1 January 2026.
Basic idea of the ZLZD
The Act, through various financial and other incentives, enables employees of a company to establish designated ownership cooperatives through which they may indirectly acquire ownership in the company in which they are employed, or in a company that is affiliated with such a company.
Who can establish an ownership cooperative
Founders and members of the cooperative may be employees of the parent or an affiliated company. Thus, employees of a subsidiary in which the parent company holds at least a 50% ownership share, at least that share of voting rights, or votes in management or supervision—thereby meeting the conditions for a dependent company—may also establish a cooperative for the purpose of acquiring an ownership interest in the parent company. The parent company is the company in which the ownership cooperative holds or will acquire an ownership stake, and may take the form of a joint-stock company, a limited liability company, or a European company (SE).
Can every employee become a member of the cooperative?
Membership in the cooperative is available to every employee of the parent or affiliated company who pays the mandatory share. The only possible restriction concerns the period of employment, whereby a 12-month employment period before joining is the strictest permissible limitation.
Obtaining the status of an ownership cooperative
The Ministry for a Solidary Future (the “Ministry“) decides on granting the status of an ownership cooperative based on an application. Based on the Ministry’s decision to grant the status, the cooperative is entered into the Register of Ownership Cooperatives. The ownership cooperative is also entered in the court register.
The purpose of the ownership cooperative must be limited in the cooperative’s statutes to acquiring and managing a capital investment for its members – employees – in a single (parent) company. Conditions for acquiring the status of an ownership cooperative further include the minimum number of members (at least five employees) and the percentage of all eligible employees who join the cooperative (at least 75% upon establishment, or at least 50% in each month of the financial year).
Employees must subscribe and pay no more than EUR 300 for membership
A cooperative member must subscribe and pay a mandatory share in the cooperative of no more than EUR 300. The amount is determined in the cooperative’s rules. It may be paid only in cash, and each member may subscribe only one mandatory share. Mandatory shares are non-transferable and cannot be encumbered.
In addition to the mandatory share, members may also pay voluntary contributions. These do not confer additional voting rights, benefits, or special status, as all members have equal rights and obligations regardless of voluntary contributions.
Employees are not liable for the cooperative’s obligations
An ownership cooperative may only be organised as a cooperative without liability, meaning that employees who are members of the cooperative are not liable for its obligations. Special rules apply to the return of shares in the event of the cooperative’s bankruptcy.
Financing the ownership cooperative
In addition to members’ contributions, the Act allows financing of the cooperative’s operations and acquisition of capital investments through contributions from the parent company, debt financing, and public funds.
The Act expressly removes certain corporate law restrictions:
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Acquisition of an ownership interest in the parent company
The cooperative will generally acquire its ownership interest based on a valuation approved by the cooperative’s general meeting, unless the purchase price is lower than or equal to the proportional part of the book value of the parent company. If the cooperative’s rules do not provide otherwise, the management board may acquire the capital investment without the approval of the general meeting in such cases.
Employees will be indirectly involved in the parent company’s business success
Through cooperative membership, employees will become indirect owners of the parent company: once acquired, the ownership interest in the parent company becomes the property of the ownership cooperative, and members’ entitlements are expressed in the value of each employee’s personal account in the cooperative. The value of employees’ shares will therefore depend on the value of the cooperative’s capital investment in the parent company, the cooperative’s debt level, and the value-allocation rules set out in the cooperative’s statutes. Consequently, employees will participate indirectly in the growth of the cooperative’s ownership stake in the parent company, either through increases credited to their personal accounts, distribution of the cooperative’s surplus during membership, or payment of their cooperative share value upon termination of membership.
Termination of cooperative membership
In the event of termination of employment or dissolution of the cooperative, the member receives the indexed value of the share; in the case of voluntary withdrawal from membership, the member receives the non-indexed value of the mandatory share.
Tax incentives for parent companies
Payments by the parent company to the ownership cooperative based on a contribution agreement are treated as labour costs and, subject to certain restrictions, as tax-deductible expenses for the parent company.
Transfer pricing rules for related parties under the Corporate Income Tax Act do not apply to the sale of a parent company share to the ownership cooperative.
Tax incentives for owners – natural persons who sell their ownership interest to the cooperative
If an individual owner decides to sell their ownership interest in the parent company to the cooperative, the personal income tax base is determined according to the contractually agreed price for that share, regardless of whether the price is lower than the market value. The positive tax base from capital gains arising from the sale of the ownership interest to the ownership cooperative is reduced by 20%.
Tax incentives for the ownership cooperative
The ownership cooperative may deduct 100% of financing income received from the parent company from its tax base (up to the amount of its tax base).
Tax incentives for employees – cooperative members
Credit of value to a member’s personal capital account in the cooperative is not considered income under the Personal Income Tax Act and is not subject to social security contributions.
Payments from the ownership cooperative to a member during membership or upon its termination (reduced by the paid mandatory share) are taxed as dividends for personal income tax purposes. The tax rate on such dividends decreases every five years from the date of joining the cooperative. After 15 years of membership, no income tax is due on such payments.
Other measures to develop ownership cooperatives
The Act provides for the possibility of additional state measures for the development of ownership cooperatives, which may be financed from the state budget or EU funds, as well as special incentives by allocating part of funds for project implementation under the Public Finance Act.
***
The new Act undoubtedly raises many questions but also opportunities. We will be happy to help you navigate these questions and seize the opportunities.
November 2025
Bostjan Spec, Partner, and Domen Humar, Student
Selih & partnerji
On 23 October 2025, the National Assembly adopted the Workers’ Ownership Cooperative Act (“ZLZD“), which will enter into force on 1 January 2026.
Basic idea of the ZLZD
The Act, through various financial and other incentives, enables employees of a company to establish designated ownership cooperatives through which they may indirectly acquire ownership in the company in which they are employed, or in a company that is affiliated with such a company.
Who can establish an ownership cooperative
Founders and members of the cooperative may be employees of the parent or an affiliated company. Thus, employees of a subsidiary in which the parent company holds at least a 50% ownership share, at least that share of voting rights, or votes in management or supervision—thereby meeting the conditions for a dependent company—may also establish a cooperative for the purpose of acquiring an ownership interest in the parent company. The parent company is the company in which the ownership cooperative holds or will acquire an ownership stake, and may take the form of a joint-stock company, a limited liability company, or a European company (SE).
Can every employee become a member of the cooperative?
Membership in the cooperative is available to every employee of the parent or affiliated company who pays the mandatory share. The only possible restriction concerns the period of employment, whereby a 12-month employment period before joining is the strictest permissible limitation.
Obtaining the status of an ownership cooperative
The Ministry for a Solidary Future (the “Ministry“) decides on granting the status of an ownership cooperative based on an application. Based on the Ministry’s decision to grant the status, the cooperative is entered into the Register of Ownership Cooperatives. The ownership cooperative is also entered in the court register.
The purpose of the ownership cooperative must be limited in the cooperative’s statutes to acquiring and managing a capital investment for its members – employees – in a single (parent) company. Conditions for acquiring the status of an ownership cooperative further include the minimum number of members (at least five employees) and the percentage of all eligible employees who join the cooperative (at least 75% upon establishment, or at least 50% in each month of the financial year).
Employees must subscribe and pay no more than EUR 300 for membership
A cooperative member must subscribe and pay a mandatory share in the cooperative of no more than EUR 300. The amount is determined in the cooperative’s rules. It may be paid only in cash, and each member may subscribe only one mandatory share. Mandatory shares are non-transferable and cannot be encumbered.
In addition to the mandatory share, members may also pay voluntary contributions. These do not confer additional voting rights, benefits, or special status, as all members have equal rights and obligations regardless of voluntary contributions.
Employees are not liable for the cooperative’s obligations
An ownership cooperative may only be organised as a cooperative without liability, meaning that employees who are members of the cooperative are not liable for its obligations. Special rules apply to the return of shares in the event of the cooperative’s bankruptcy.
Financing the ownership cooperative
In addition to members’ contributions, the Act allows financing of the cooperative’s operations and acquisition of capital investments through contributions from the parent company, debt financing, and public funds.
The Act expressly removes certain corporate law restrictions:
|
Acquisition of an ownership interest in the parent company
The cooperative will generally acquire its ownership interest based on a valuation approved by the cooperative’s general meeting, unless the purchase price is lower than or equal to the proportional part of the book value of the parent company. If the cooperative’s rules do not provide otherwise, the management board may acquire the capital investment without the approval of the general meeting in such cases.
Employees will be indirectly involved in the parent company’s business success
Through cooperative membership, employees will become indirect owners of the parent company: once acquired, the ownership interest in the parent company becomes the property of the ownership cooperative, and members’ entitlements are expressed in the value of each employee’s personal account in the cooperative. The value of employees’ shares will therefore depend on the value of the cooperative’s capital investment in the parent company, the cooperative’s debt level, and the value-allocation rules set out in the cooperative’s statutes. Consequently, employees will participate indirectly in the growth of the cooperative’s ownership stake in the parent company, either through increases credited to their personal accounts, distribution of the cooperative’s surplus during membership, or payment of their cooperative share value upon termination of membership.
Termination of cooperative membership
In the event of termination of employment or dissolution of the cooperative, the member receives the indexed value of the share; in the case of voluntary withdrawal from membership, the member receives the non-indexed value of the mandatory share.
Tax incentives for parent companies
Payments by the parent company to the ownership cooperative based on a contribution agreement are treated as labour costs and, subject to certain restrictions, as tax-deductible expenses for the parent company.
Transfer pricing rules for related parties under the Corporate Income Tax Act do not apply to the sale of a parent company share to the ownership cooperative.
Tax incentives for owners – natural persons who sell their ownership interest to the cooperative
If an individual owner decides to sell their ownership interest in the parent company to the cooperative, the personal income tax base is determined according to the contractually agreed price for that share, regardless of whether the price is lower than the market value. The positive tax base from capital gains arising from the sale of the ownership interest to the ownership cooperative is reduced by 20%.
Tax incentives for the ownership cooperative
The ownership cooperative may deduct 100% of financing income received from the parent company from its tax base (up to the amount of its tax base).
Tax incentives for employees – cooperative members
Credit of value to a member’s personal capital account in the cooperative is not considered income under the Personal Income Tax Act and is not subject to social security contributions.
Payments from the ownership cooperative to a member during membership or upon its termination (reduced by the paid mandatory share) are taxed as dividends for personal income tax purposes. The tax rate on such dividends decreases every five years from the date of joining the cooperative. After 15 years of membership, no income tax is due on such payments.
Other measures to develop ownership cooperatives
The Act provides for the possibility of additional state measures for the development of ownership cooperatives, which may be financed from the state budget or EU funds, as well as special incentives by allocating part of funds for project implementation under the Public Finance Act.
***
The new Act undoubtedly raises many questions but also opportunities. We will be happy to help you navigate these questions and seize the opportunities.
