1. PRIVATE SECTOR

2. Incorporated/Unincorporated
Latin: corpus = body
English: corpse = dead body
Incorporated ~ “has a body” => has legal standing => can be sued, etc.
E.g., Ltd., PLC
Unincorporated: the opposite of the above
E.g., Sole trader, partnership

3. Unincorporated businesses
are not legal entities on their own. This means that the businesses themselves cannot be held liable for debt or legal issues. Instead, all legal responsibility stays with the owner or owners. The owners have unlimited liability for debts, which means that they are responsible for all the debts of the firm even with their personal assets (e.g., car, house, etc.).

4. Incorporated businesses
have a legal identity. This is necessary because their ownership structure is not stable: shareholders can easily sell their shares while others can become shareholders, i.e., owners. Therefore such companies are financially and legally responsible for their own actions and as a result, they can be taken over, sued and liquidated. Since the owners (shareholders) are legally separate from the company, they have limited liability for debts, i.e., they cannot lose more money than what they had invested into the business when they bought their shares. All losses and debts are covered by the company’s assets.

5. WHO DO YOU SUE, IF...
... the hairdresser (a sole trader) dyed your hair bright green (and you wanted brown)?
... you bought poisoned fish food from ProAqua PLC and all your fish died?

6. Limited or unlimited liability?
A person's financial responsibility is limited to a fixed sum, usually the value of a person's investment in a company. A shareholder in such a company is not personally responsible for any of the debts of the company, other than for the value of his investment in that company.
Limited liability
The owner(s) are personally responsible with their own wealth/assets for any legal actions and debts the company may face.
Unlimited liability

7. Types of businesses (RB, p. 48)
What are the most important aspects to consider about different types of businesses?

8. Answer these questions about business organisations:
Which are easier to set up, which are harder? Why?
Where is it the easiest to make decisions?
What can end a business?
Which businesses have unlimited liability?
Which have limited liability?
How is the Board of Directors formed?
What is the main difference between Ltds and Plcs? (Why are Ltds “private” and Plcs “public”?)
What kind of management problems can arise in the 4 types of business organisations?

9. Make sentences with these words
Private limited companies, sell, shares, general public
Public limited companies, sell, shares, general public, stock exchange
Disclose accounts, shareholders, right to know

10. Possible solution:
Private limited companies cannot sell their shares to the general public.
Public limited companies can sell their shares to the general public on the stock exchange
Plcs are obliged to disclose their accounts at the end of the financial year, because shareholders have a right to know how the company is doing.

11. Answer the questions:
Why should unlimited liability make doctors and lawyers act responsibly?
Explain: “a partnership is not a legal entity separate from its owners.”
How do private limited companies become public limited companies in Britain?
How is this done in America?
What happens if a limited company goes bankrupt?

12. Vocabulary: Forming a PLC and ending a company.
How does an Ltd. become a PLC?
IPO = Initial Public Offering, flotation
a company issues shares to the public for the first time. Shares are sold at the stock exchange/market.
What happens if a company goes bankrupt?
To liquidate a company:
to close a company and sell its assets