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1.0. Organizational Forms, CI Features, and Ownership - Coggle Diagram

- - - - Legal identity
        
        Whether the business is legally considered a separate entity or person apart from its owners
      - Owner-manager relationship
        
        The relationship between the owner(s) of the business and those who manager the business
      - Owner liability
        
        The extent to which owners are personally legally liable for actions or debts undertaken by the business
      - Taxation
        
        The treatment of business profits or losses for tax purposes
      - Access to financing
        
        The ability to raise capital to fund expansion and distribute risks
  - - - Sole Trade or Sole Proprietorship
      - Partnership
        
        General partnerships
        
        Limited partnerships
        
        Limited liability partnerships
      - Limited Company
- - - - Sole proprietorship is the simpliest business structure which has only one owner.
      - The owner:
        
        Personally funds the capital needed to operate the business
        
        Ratains full control over the opeartions of the business
        
        Participates fully in the financial returns and risks of the business
    - - Legal identity: Have no legal identity, are considered extension of owner
      - Owner-manager: owner = manager
      - Owner liability: umlimited for owner
      - Taxation: Profits from business are taxed as personal income
      - Operation: simply and flexible
      - Capital financing: informally through personal means
      - Business potential: growth is limited by owner's ability to finance & personal risk appetite (khả năng)
  - - - Definition: GP has 2 or more owners (partners) called partners or GPs. Partners roles and responsibilities are outlined in a partnership agreement
      - Charateristic
        
        Business potential: Business growth is limited by resourcing capabilities and risk appetite
        
        Operation: operated by a group of individuals
        
        Owner liability: Partners share all risk and owner liability
        
        Capital financing: Contributions of capital and expertise by partners
        
        Owner - manager: partner-operated business
        
        Risk-return separation: All profits, losses, and risks of the business are collectively assumed and shared by the partners
        
        Legal identity: no legal identity, partnership agreement sets ownerships
        
        Legal identity: no legal identity, partnership agreement sets ownerships
    - - Definition: LP is a form of partnership which have:
        
        at least 1 GP responsible fro the management of the business
        
        and LPs invested in the limited partnership
      - Charateristics:
        
        Capital financing: partners contribute capital & expertise
        
        Business potential: growth limited by
        
        GP/LP financing capabilities and risk apptite
        
        GP competence (năng lực) & intergrity (trung thực)
        
        Taxation: taxed as personal income for all partners (pass-through businesses)
        
        Owner liability:
        
        GP has unlimited
        
        LPs have limited
        
        can lose only up to their investment amount
        
        Risk-return separation:
        
        All partners are entitled to a share of the profits
        
        GP typically getting a larger portioni of profits (vì nta còn kim luôn vị trí quản lý á)
        
        Partnership agreements are often limit the transferability (chuyển nhượng) of ownership interest or expansion beyond a small group of partners
        
        Owner-manager: GP operates the business
        
        Legal identity: no legal identity, partnership agreement set ownership
    - - not require a GP and is composed entirely of LPs, they appointing one or more partners as managing partners
      - In US, LLPs are permitted only for professional services firms (law, accounting, engineering, and architecture)
  - - - Charateristic
        
        Owner (shareholders/members), elect a board of directors to manage the company
        
        Have legal limits on the number of owners and require votes for transferring ownership interest
        
        Improved transferability of ownership by dividing ownership into units called shares
        
        Taxes: paid only at the shareholder, not company level
        
        Limited liability for all owners
    - - Characteristic
        
        No legal restrictions on the number of owners or ownership transferability (chuyển nhượng), while still featuring limited liability and separation of ownership and management
        
        Are the most suitables form that seek to go public and are the dominant form globally by revenues and asset values
        
        Similar to private limited companies
        
        Disadvantage: taxation: taxes at business level and again at the personal level if profits are distributed to shareholders
- - - - the separation between who own the business - the owners and those who operate the business - the BOD and BOM
      - Owner
        
        Largely removed (tách biệt) from the day-to-day operations of the business
        
        If the BOM/BOD does not act in shreholders' best interests, shareholders can enact change through exercising voting rights attached to their shares
      - Management
        
        Directors: Oversee business operations
        
        Executive-level management (CEO): Resposible for management and operations of the company, who is accountable for investing, financing, and operating decisions
        
        Directors and managers have a primary responsibility to act in the best interest of shareholders and, indirectly, all stakeholders
      - The separation of ownership and management enables the corporation to obtain financing from a larger universe of potential investors who do not need (or want) to be involved ini management
    - - A corporation is a legal entity separate and distinct from its owners ( who operate the company)
      - A corporation has own legal rights and obligation of an individual, and engage in many activities: enter into contracts, hire employees, sue and be sured, borrow and lend money, make investments, and pay taxes
      - Cty lớn có cơ sở ở nhiều nước khác nhau thì are subject to regulatory jurisdictions where:
        
        The company is incorporated (hợp nhất)
        
        Business is conducted
        
        The company's securities are listed
        
        and for such activities as:
        
        Registration
        
        Financial and non-financial reporting and disclosure
        
        Capital market activities (issuance, trading, investment)
    - - Owners have residual claim to the company's net assets after its liabilities have been paid
      - Shareholders share inn risk and return of the company in proportiono to their share ownership unless the corporate charter specifies differently
      - Owners have limited liabiliy, the maximum amounts they can lose is what they invested, are not responsible for the debts of the corporations
    - - Coporations access external financing more easily than other business structures
      - Corporations are financed based on a private contractual agreement or in the form of a security:
        
        (1) Equity: by selling shares to investors or reinvesting profits, shareholders have a right to receive dividend
        
        (2) Borrowing, or debt: (loans, bonds, and leases), must be repaid on a pre-specified date in the future with interest
    - - The corporation is subject to the tax authority and tax code governing
      - Taxation can be different from country to country
        
        Shareholders may be taxed on distributions (dividends) as personal income (double taxation)
        
        Shareholders do not pay a personal tax on dividends if the corporation has paid tax previously (cty trả 2 phần luôn rồi - chứ ko phải là mất đi đâu)
        
        Shareholders receive a personal tax credit for their proportinal share of taxes paid by the corporation
        
        Corporations pay no tax at all or may face different tax regimes within one country
- - - - Ownership
        
        Shares trade on an exchange
        => Allow to be more easily transferring ownership
        
        Share price is determined through trading activities on the exchange
        
        Stock price changes are observable overtime, so company's value changes can be observed
      - Share issuance
        
        Become public by issuing shares in an IPO in the primary market and there after trade in the secondary market
        
        Raise more equity capital after listing through issuing additional shares in the primary market, typocally with vary large amounts from many investors
      - Registration and disclosure requirement
        
        Greater regulatory and disclosure requirements(financial information through periodic fillings with their regulator)
    - - Benefits of investing in private company
        
        More potential returns
        
        Investors have greater control over management and greater chance of ownership overlap (sở hữu chồng chéo)
        
        Few costly, few regulations and cost with raising financing
        
        Greater focus on the long run
      - Ownership
        
        Share do not trade on an exchange
        => difficult to transfer ownership
        
        Share price is not observable
        => making valuation is more difficult
        
        The investment in private company is usually locked up until the company is acquired for cash or shares by another company, or it goes public
      - Share issuance
        
        Raise equity capital through a private placement to accredited (nhiều tiền, nhiều kinh nghiệm) investor, typically with much smaller amounts from far fewer investors
        
        private placement memorandum (PPM): describes the term of the offering in the private placement, and the risks involved in making an investment in the company
      - Registration and disclosure requirement
        
        not same level of regulatory disclosures, not required to file documents with the regulatory authority that oversees public companies
    - - The ability to transfer ownership between investors
      - The process of issuing new shares
      - Registration and disclosure requirement
- - - - It involved the participation of investment banks who underwrite, or guarantee, the offering of new shares
      - Companies must meet specific listing requirements required by the exchaged to complete an IPO
    - - Refer to a stock exchange agrees to list the existing shares of a private company.
      - It different from an IPO in 2 ways:
        
        It does not involve an underwriter, which means it can be done more quickly and less costly
        
        No new shares are issed, no new capital is raised. Shares are sold by existing shareholders
    - - Refers to when 1 company purchases most or all of another company's shares to gain control of that company.
      - 2 ways through acquisition:
        
        The private company indirectly becomes public if the acquiring company is public
        
        The private company becomes public when it is acquired by a SPAC (Special Purpose Acquisition Company), or "Blank check" company
  - - - A "take-private" or "go-private" process involves investors acquiring all of the company's publicily traded shares and delisting the company from the exchange
    - - company's higher valuation
        
        greater control
        
        out of public view
    - - Management changes, selling asset, restructuring, or realizing cost savings that are expected to exceed the premium paid and financing cost
    - - Leverage buyout (LBO)
        
        An ivestor acquired all shares and delists it
        
        They involve borrowing large amount of money to finance acquisition
        
        Investors are not affiliated (ko phải người của cty) with the company they are buying
      - Management buyout (MBO)
        
        An ivestor acquired all shares and delists it
        
        They involve borrowing large amount of money to finance acquisition
        
        Investors are member of company's current management team