Legislative challenges and opportunities for employee ownership in Brazil

Employee ownership (EO) has emerged as a promising model for reducing economic inequality, enhancing corporate resilience, and fostering participatory governance. However, its implementation in emerging economies, such as Brazil, remains limited due to legal, institutional, and cultural constraints. This study analyzes the current Brazilian legislative framework and its implications for the adoption of EO mechanisms. A qualitative research design was employed, combining documentary analysis of national legislation with a systematic literature review of international EO experiences and theoretical contributions. Drawing on comparative literature and international case studies, the chapter identifies key barriers—including the absence of a specific legal category, lack of fiscal incentives, judicial uncertainty, and the predominance of hierarchical ownership structures. It also explores viable alternatives such as cooperatives and holding companies, assessing their limitations and potential. Based on these findings, the study proposes a multidimensional reform agenda to enable EO adoption in Brazil, including legal recognition, tax benefits, access to credit, and capacity-building initiatives. The study contributes to the academic and policy debate by arguing that unlocking EO in Brazil requires institutional innovation, cultural change, and political will to reconfigure the relationship between labor and capital.