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STATE OWNED COMPANIES / SOE (FACTORS RELATING TO A SOE/SOC (Name: (SOC)…
STATE OWNED COMPANIES / SOE
CHARACTERISTICS
NAME MUST END WITH SOC Ltd
CREATE SERVICES THAT IS IMPORTANT TO CONSUMERS
Examples : ESKOM, TELKOM, TRANSNET
LOCAL GOVERNMENT UNDERTAKES REFUSE REMOVAL, PUBLIC SWIMMING POOLS AND LIBRARIES
TAX ARE FUNDING SOE
ADVANTAGES
ESSENTIAL SERVICES ARE PROVIDED
EVERYONE SHARES THE PROFIT FROM PUBLIC OWNERSHIP
WASTEFUL DUPLICATION OF SERVICES IS ELEMINATED
PLANNING CAN BE CO-ORDINATED THROUGH CENTRAL CONTROL
DISADVANTAGES
MAY BE INEFFICIENT DUE TO A LACK OF PROFIT MOTIVE
MAY BE UNPROFITABLE
THEY ARE A DRAIN ON STATES FINANCES
LOSSES MUST BE MET BY THE TAXPAYERS
POLITICAL INTERFERENCE CAN OCCUR
SOC INTERFERE WITH FREE MARKET FORCES
FACTORS RELATING TO A SOE/SOC
Name:
(SOC) Ltd - State Owned Company
SOE - State Owned Enterprise
GOC - Government Owned Corporation
Ownership: 1 or more shareholders, with government as the MAIN shareholder
Management: Managed by 1 or more DIRECTORS
Capital: Capital from the state via treasury, while private institutions may also own shares
Legal Requirements: Submit QUARTERLY and ANNUAL audited FINANCIAL statements to the department of public enterprises
Division of profits: Shareholders receives DIVIDENDS and rest of the profits are reinvested into the SOE
Liability: NO LIABILITY
Continuity: Until Liquidated or CLOSED
DEF: All public enterprises are owned by the state, and managed by national, provincial and local government. These enterprises form the public sector of the economy.