I don't think that's actually easy to do without causing all current employees to incur significant taxes.
>The employees would not be taxed just for receiving the stock/ownership, only once they sold it and made it liquid.
This is incorrect; the initial grant is income and anything after that is capital gains. This is also how RSUs work.
My sibling commentor has the workaround.
And make no mistake, that's already exactly what's being proposed here, in making EVGA an employee-owned corporation: a gift of equity from the current shareholders, to a set of new shareholders.
The only difference in what I'm describing is that there's a trust / holding corporation in between the givers and the recipients.
If this was legal all sorts of companies would do this all the time.
I'm sure they'll have to write down a lot of inventory because prices went down, but for tax purposes their valuation is still going to be very high based on earnings. That's why private companies other than startups rarely go this route.
edit: (in the US at least)
YMMV but an NQSO purchase agreement can be your friend.
https://www.canada.ca/en/revenue-agency/services/tax/individ...
And yes, this is a little bit insane.
Not sure in EVGAs case what laws govern their business and where employees are and what existing structure is… but where there’s a will, there’s a lawyer to make a way.
Different industry, but it might be worth looking into how New Belgium went employee owned, with apparently equitable results:
https://www.forbes.com/sites/christophermarquis/2020/05/01/e...
...but give the current employees voting rights without equity, proportional to their seniority... (Or just 1 vote each.)
And then start rolling out equity, maybe, depending.
Easiest would be to convert to some sort of new 501 non profit with employee control.
People don't have to pay taxes when they are hired at an employee owned company like winco, and students don't have to pay taxes when they join a housing coop.