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Lecture 2 - Private Sector - Types and Purposes

1. The private sector refers to parts of the economy owned and controlled by private individuals rather than the government, with profit seeking as a central goal. Common legal structures for private sector organizations include sole proprietorships, partnerships, limited liability companies, and joint stock companies. 2. Private sector organizations can be either for-profit or non-profit. For-profit private companies distribute profits to shareholders as dividends, while non-profits reinvest any surplus funds. The main purposes of private sector organizations are survival, establishing market share, profit, and growth. 3. FPT Corporation is an example of a joint stock company in Vietnam, which has a legal entity status, limited liability for shareholders,

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34 views53 pages

Lecture 2 - Private Sector - Types and Purposes

1. The private sector refers to parts of the economy owned and controlled by private individuals rather than the government, with profit seeking as a central goal. Common legal structures for private sector organizations include sole proprietorships, partnerships, limited liability companies, and joint stock companies. 2. Private sector organizations can be either for-profit or non-profit. For-profit private companies distribute profits to shareholders as dividends, while non-profits reinvest any surplus funds. The main purposes of private sector organizations are survival, establishing market share, profit, and growth. 3. FPT Corporation is an example of a joint stock company in Vietnam, which has a legal entity status, limited liability for shareholders,

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Lecture 2

Private sector: Legal


structure and Purposes
Contents

1. Introduce and Purposes of Private sector

2. Basic legal understanding of company

3. Types and Legal structure of Private sector


1. Introduction and
Purposes of Private sector
Private sector

Concept of Private sector


Definition of Private sector

Private sector (công ty thuộc sở hữu tư nhân) – that part of the economy
where ownership and control of the organization is in the hands of
private individuals or groups and where profit-seeking is a central
goal

E.g. FPT corporation, Vingroup…


Evidence to prove the
company is Private sector

• The Owner structure chart of the company: (found in the


Annual Report, Website…)

• If the Private individual or organization own more than


50%, the company belong to the Private sector
Evidence: Private-owned company:
FPT EXAMPLE

• https://www.youtube.com/watch?v=VbKw2LCJ6mw
Evidence: Private-owned company:
VIN GROUP

• https://www.youtube.com/watch?v=SZKiVXPVXsY
Private sector

Purposes of Private sector


Non-profit and for profit?

• For profit → a part of profit will be distributed for members


or shareholders (dividend)
Sources: dividend paid; profit paid for shareholders in the
Balances sheet
Evidences for Profit: FPT EXAMPLE
2. Basic legal understanding
of company
Private sector

Basic legal terms


Basic terms: understanding

• Legal personality/entity: an individual created by law → Right to sue/


duty to be sued under the company’s name (tư cách pháp nhân)

• Legal representatives: agent of company

• Limited liability: liability of owners limited by shares (trách nhiệm hữu hạn)

• Unlimited liability: Owners are liable for ALL the debts of the
organization (trách nhiệm vô hạn)
Private sector

The regulations for


companies in Vietnam and in
the UK
Vietnamese Law for companies

• Luật Doanh nghiệp 2020

(The Enterprise Law in Vietnam 2020)


The UK Law for companies

• The Company Act 2006 in the UK


3. Types and Legal structure
of Private sector
Regulations of private
sector

• In the UK: The Company Act 2006 mainly

• In Vietnam: The Enterprise Law 2020


Basic types of company in
Vietnam

1. Sole trader/Proprietorship

2. Partnership

3. Limited liability company

4. Joint stock company


Basic types of company in
UK

1. Limited and unlimited companies


2. Private and public companies
3. Companies limited by guarantee
and having share capital
4. Community interest companies
Private sector

3.1 Sole Trader/ Proprietorship:


Legal structure
(Công ty tư nhân)
Sole Trader

Vietnamese regulations
Sole trader: concept

“A sole trader is a business owned by one individual who is


self-employed and who may, in some cases, employ other
people on either a full-time or a part-time basis”
(Doanh nghiệp tư nhân/Công ty tư nhân)
Sole traders: characteristics

• 1 individual owner (Công ty tư nhân/ Doanh nghiệp tư nhân)

• Unlimited personal liability (trách nhiệm vô hạn) to the debt of the


business

• Not being registered and No legal entity/personality (tư cách


pháp nhân)
Sole Trade

Regulations in the UK
Sole trader

✓ No differences

✓ 80% businesses in the UK is sole trader.


Private sector

3.2 Partnership:
Legal structure
(Công ty hợp danh)
Partnership

Vietnamese Regulations
Partnership

• More than 1 owner (Partners):

• Ordaining Legal entity status

• Both limited and unlimited liability with 2 types of Partners:

✓ Unlimited partners (thành viên hợp danh): at least 2

✓ Limited partners (thành viên góp vốn)


Partnership

Regulations in the UK
Partnership: concept

• The Partnership Act 1980 (UK):

“The relation which subsists between persons carrying on a


business in common with a view to profit’

(Công ty hợp danh)


Partnership characteristics
• More than 1 owner: Partners (thành viên hợp danh)
• No legal entity status
• Unlimited or limited liability depends on the specific types:
✓ The Partnership Act 1980 (UK): Partners: unlimited liability
✓ The Limited Liability Partnership Act 2000 (UK): Partners: limited liability (trách
nhiệm hữu hạn)
✓ Some types of business: profession: Lawyer, doctor, accountant, auditor..:
unlimited liability (Exception)
Private sector

3.3 Limited Liability:


legal structure
(Công ty Trách nhiệm hữu hạn)
Limited liability company

Vietnamese Regulations
Limited Liability company
in Vietnam

• From 1 to 50 members: a limit of 50

• Legal entity status

• Liability of members: Limited


Limited Liability company
in Vietnam

• 2 types:

✓Limited liability company with 1 member

✓Limited liability company with equal or more than 2


members
Limited Liability company
in Vietnam

• Find the differences between LLC and Sole trader in


Vietnam.
Limited liability company

Regulations in the UK
Limited liability company

✓ Private limited company (công ty TNHH tư nhân)


Private sector

3.4 Joint stock company:


Legal structure
(Công ty Cổ phần)
Joint stock company

Vietnamese Regulations
Joint stock company

• At least 3 shareholders (cổ đông) and no limit

• Liability of shareholders: Limited

• Enjoy: Legal entity status


Joint stock company

• Public company (công ty đại chúng)

The Securities Law 2006 of Vietnam: supplement one more case:


100 investor and charted shares which is equal or more than 10 billions
Public company
listed on stock exchange market
FPT EXAMPLE
Public company
listed on stock exchange market
FPT Securities EXAMPLE
“Registered” Limited companies:
characteristics

Regulations in the UK
“Registered” Limited companies:
characteristics

• 2 types:

✓ Private limited company(công ty TNHH tư nhân)

✓ Public limited company (công ty TNHH đại chúng)


Public and private

Public company Private company


(cổ phần chào bán công khai) (cổ phần không chào bán công khai)
Charted capital >= £50,000 Any type of registered company which
is not public
“Plc” ending of name Limited liability on name: “ltd”
Listed or not listed on Stock Transfer of share controlled by
exchange (niêm yết trên sàn) company

E.g. Family business


Public limited company
Purposes of Private sector

• Survival
• Establish a proportion in the marketplace
• Key objectives: profit and growth
• Conditioned by legal structure
• Tend to coincide with personal goals of the owners
• Subsidiary: objectives tend to be controlled by the parents
Exercise 2

- Explain the main characteristics and the


purposes of Private sector.
- Give one example and explain which
type of private company it is.
THE END

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