Background
As proud contributors to the Welsh economy and culture, it is fitting that award-winning tv company Cwmni Da – which means good company in English – chose to become employee owned. The Caernarfon based business was founded in 1996, it employs 50 people and has a £5 million turnover. Its expertise is in making factual, drama, children’s and entertainment programmes, mainly in the welsh language. Speaking about the company’s transition to employee ownership, managing director Dylan Huws explains that he wanted the company to remain in the hands of the staff who had helped make it a success.
Employee involvement formula
For Cwmni Da, employee ownership is a process of culture change, which needs to be managed on an ongoing basis. That process involves engaging staff, education and mentoring and empowering people to make decisions. Dylan Huws says that he now shares more company information than ever before and that the team are now getting a better understanding of how the business works.
Description of the process
First the company was valued, funds were then raised from the banks to buy the shares, and then 100 percent of the shares were transferred into an employee ownership trust. The shareholding is now held in the trust on behalf of the workforce. The wales co-operative centre was the company’s first point of contact and project managed the process from beginning to end.
Mechanisms used to implement the process
An employee ownership trust was created as a mechanism to transfer ownership from the owner Dylan Huws to the employees. The trust is overseen by a corporate trustee which has a board which includes a solicitor, an accountant, Dylan as the managing director, and a staff member. The trust looks after the interests of the employees and decides each year how much to re-invest and how much it can afford to pay out to staff.
Principal barriers
Founder owner Dylan Huws says: “the only barrier we maybe experienced was that people still think of employee ownership as rather left field, but it needs to be seen as a mainstream option. It is good for outgoing owners because you don’t get taxed when you sell your shares to the trust, but your business does have to be robust enough to be able to raise the finance.”
Factors of success
Dylan says: “you need a good team, expert external advisors and you need to have good communication in place from the beginning. I really explored the concept in depth before bringing people in to help, but in hindsight having a timetable which was understandable to everyone might have been beneficial.”
Main benefits for the company, employees and environment/society
Transferring ownership through an employee ownership trust does involve setting up a new entity, but there are tax advantages for both outgoing and incoming shareholders. Dylan Huws believes: “overall it’s also worthwhile leaving something behind you which is rooted in the local area. We work in both the Welsh and English languages and feel a connection to the audiences we serve, so it feels important for the business to continue to be rooted here in the local community. Everyone has a stake in the future and that’s important. “In recent years, consolidation in the independent television production sector has seen several welsh companies being sold to larger entities, and this means more often than not that ownership is no longer in Welsh hands.
Transferability
The company is now owned by the Employee Ownership Trust. Ownership can be transferred if the trust sells its shares to another party but this can only be done if a 60 per cent majority of employees agree.
