1. PRIVATE SECTOR Resource bank, p.46 - 55

2. PRIVATE SECTOR The private sector is characterized by private ownership in the hands of private individuals. It includes businesses that are run for the benefit of the people who own them.

3. What should one think of before starting a business? Think of a business you are familiar with and discuss the following: 1. Who owns the business? 2.How was the start-up capital raised? 3.Who manages the business? Who makes major decisions? 4.Does the business need to publish (disclose, unveil) its accounts? 5.Who claims the profits? 6.Are the owners personally liable for losses if a business goes bankrupt? 7. Is there a legal difference between the owner(s)and the business? Do exercise III on p. 46

4. THE PRIVATE SECTOR - GLOSSARY legal entity an organization considered as separate, independent unit for legal purposes (it can be sued, taken over or liquidated) limited liability [uncountable] the legal position of being responsible for paying only a limited amount of the company’s debt if it goes out of business or goes bankrupt unlimited liability the owner is responsible for any debts the business runs up (owner’s personal wealth may be claimed) Overdraft (“dozvoljeni minus” na koji se plaćaju kamati) The amount by which withdrawals exceed deposits, or the extension of credit by a lending institution to allow for such a situation. Board of Directors (upravni odbor) Individuals elected by a corporation's shareholders to oversee the management of the corporation. Share - certificate representing one unit of ownership in a company disclosure of accounts Act of telling details of the company’s accounts to the shareholders access to capital – the company is able to obtain or get the capital

5. To raise the start-up capital – to obtain the money for founding a new company To claim the profits – to take as the rightful owner To issue shares, go public or be quoted on the Stock Exchange Dividends Assets are items of value: cash, land, buildings, machines,jewelery, shares managing director - MD (BrE) or chief executive officer - CEO (AmE) - generalni direktor appointed by the board of directors AGM – annual general meeting of the shareholders (generalna skupština)

6. Incorporated business the business has a separate legal identity from its owner Unincorporated business There is no legal difference between the owners and the business

7. BUSINESS ORGANISATIONS IN THE PRIVATE SECTOR… …WITH UNLIMITED LIABILITY (unincorporated) sole proprietorship (trgovac pojedinac, obrt) Partnership (društvo osoba) …WITH LIMITED LIABILITY (incorporated) private limited company (društvo s ograničenom odgovornošću) public limited company (dioničko društvo)

8. SOLE PROPRIETORSHIP, PARTNERSHIP, OR BOTH? owned by one person only (who may employ other workers) medicine, accountancy, law farmers, small scale manufacturers, retailers, hairdressers… owned by 2 -20 partners unlimited liability possibility of specialisation

9. DIFFERENCE BETWEEN Ltd. AND Plc. Ltd. ownership - usually just a few people who are shareholders (smaller businesses) it cannot go public or be quoted on the Stock Exchange (sale of shares among the shareholders but not to the general public) claim on profits – shareholders by dividend payment Control and decision making: board of directors (upravni odbor) elected by shareholders limited liability for debts Plc. Ownership - shareholders shares owned by the general public on the Stock Exchange (the company can go public or be quoted, issue and sell shares on the Stock Exchange) more legal requirements for formation Control and decision making: board of directors (upravni odbor) elected by shareholders accounts need to be audited and published (public information) limited liability for debts

10. Documents for limited companies Documents needed for the registration of the company: 1. The Memorandum of Association (Charter, AmE) name, type of business, premises, total share capital – for the outside world (Izjava o osnivanju) 2. The Articles of Association (Bylaws, AmE) powers and duties, issue of shares, AGM, salary and appointment of MD – for the internal purpose ( Statut kompanije)

11. Do exercise IV on p. 47 Read the chart on p. 48 Do exercise VI, VII and VIII on p. 49 HW p. 50 / IX

12. GENERALLY ON LIMITED COMPANIES… private limited and public limited companies have an independent legal existence from their vlasnici companies in which shareholders have limited odgovornost (in case of dugovanja, each shareholder is odgovoran only for the amount he has invested)

13. owned by shareholders who can glasovati and take a share of the profit the capital is divided into dionice/udjeli shareholders biraju a Board of Directors and a chairperson the BoD imenuje managers to run day-to-day business

14. Annual General Meeting se održava every year documents which need to be sastavljeni: 1 Memorandum of Association 2 Articles of Association

15. BUSINESS ORGANISATIONS IN THE PRIVATE SECTOR IN CROATIA …WITH UNLIMITED LIABILITY Responsible for any loss or debt Crafts Independent professions …WITH LIMITED LIABILITY Responsible for the debts limited to the amount they invested They are legal entities: can be sued, taken over and liquidated) Limited liability companies (društvo s ograničenom odgovornosti, d.o.o.) Companies limited by shares or joint stock companies (dionička društva,d.d.)

16. d.o.o Shareholders invest in the capital Sell shares but not to the general public Company structure: 1.An assembly (skupština) 2.A management board (uprava) 3.A supervisory board (nadzorni odbor) – optional Obliged to submit their financial reports to the Croatian Financial Agency (Fina) d. d. Higher minimum of share capital (osnivački kapital) More shareholders Can decide to go public – sart trading shares on the stock exchange Company structure: 1.The general assembly 2.A management board 3.A supervisory board board of directors (upravni odbor) Submit the financial reports to Fina Have to disclose the accounts publicly – make them available to shareholders, investors and general public

17. CRAFT, INDEPENDENT PROFESSION, LIMITED LIABILITY COMPANY OR JOINT STOCK C.? owned by one person only (who may employ other workers) Company’s finances separated from personal finances of the owner Self-employed medicine, accountancy, law farmers, small scale manufacturers, retailers, hairdressers… Losses are covered from company’s assets unlimited liability Limited liability Only one makes decisions and enjoys all the profit Businesses are not legal entities

18. Read the text on p. 51 Answer the questions Do exercises II, III, IV on p. 52-53 HW Study the chart on p. 54 Do exercise I on p. 55

19. FILL IN THE GAPS WITH THE MISSING WORDS: Partnership and sole proprietorships are the types of private sector businesses in GB where the owners have (1) __________ liability for (2)_______. In case of (3)__________ the owners might lose all their (4)________. In the businesses with limited (5)_________, the investors are only (6) _______ for the amount of (7)_______ they (8)_______. (9)_______ limited companies can issue (10)________ but the companies cannot (11)_______ them to the public. Their owners can only (12)_______ capital from friends or from banks. If a business is successful and wants to expand, it can apply to the (13)________ _______ to become a (14)________ limited company. Next, it has to publish a (15)______ and offer its shares for sale on the open stock market. If a business has a separate (16)_____ identity from its owner(s) it is (17) _______ business. On the other hand, if there is no (18)_____ difference btw the owners and the business it is (19)_______ business.

20. Partnerships and sole proprietorships are the types of private sector businesses in GB where the owners have 1.unlimited liability for 2.debts. In case of 3. bankruptcy the owners might lose all their 4.assets. In the businesses with 5. limited liability, the investors are only 6.liable for the amount of 7.capital they 8. have invested. 9. Private limited companies can issue 10. shares but the companies cannot 11. offer them to the public. Their owners can only 12. raise capital from friends or from banks. If a business is successful and wants to expand, it can apply to the 13. Stock Exchange to become a 14. public limited company. Next, it has to publish a 15. prospectus and offer its shares for sale on the open stock market. If a business has a separate 16. legal identity from its owner(s) it is 17. incorporated business. On the other hand, if there is no 18. legal difference btw the owners and the business it is 19. unincorporated business.

21. Match the phrases to make meaningful collocations. Then use them to fill in the gaps. Closedowntaxes Set updebts Raisea tax return Draw upprofit Levydocuments Run up revenue Registeran Ltd. Expand a firm Take overa Plc. Filebusiness Claima company Owna sole trading business

22. Key Close down a firm (zatvoriti firmu) Set up a company (osnovati firmu) Raise revenue (napuniti, povećati prihod) Draw up documents (sastaviti dokumente) Levy taxes (nametati poreze) Collect taxes(ubirati poreze) Run updebts(napraviti dugovanja) Register a Plc. (registrirati, prijaviti d.d.) Expand business (proširiti poslovanje) Take over a Ltd.(preuzeti d.o.o.) Claim profit (imati pravo na dobit) Own a sole trading business File a tax return(poslati poreznu prijavu)

23. Fill in the gaps with the collocations from the previous exercise. 1.The company that has ______ __ a lot of _____ will be ______ ______. 2.In order to ____ ___ a ________ you have to own some capital or take a loan from the bank. 3.Taxes are meant to _______ ________ for the government. 4.In order to ________ a _______, a lawyer specialised in the company law needs to _______ ____ two important _______. 5.The owner who ______ a _______ ________ ________ is the only one who _______ _______. 6.Every February the tax authorities in Croatia ________ ________ and the citizens have to _______ a ____ ________. 7.A successful private limited company may ______ ______ another ______ in order to _________ _________.

24. Key The company that has run up a lot of debts will be closed down. In order to set up a company you have to own some capital or take a loan from the bank. Taxes are meant to raise revenue for the government. To be able to register a Plc., a lawyer specialised in the company law needs to draw up two important documents. The peson who owns a sole trading business is the only one who claims profit. Every February the tax authorities in Croatia levy taxes and the citizens have to file a tax return. A successful private limited company may take over another Ltd. in order to expand business.