GENERAL CHARACTERISTICS OF ENTERPRISE 1 Nature objectives and

GENERAL CHARACTERISTICS OF ENTERPRISE 1. Nature, objectives, and activity of enterprise 2. Legal base for the enterprise activity 3. Kinds of enterprises and incorporation in Ukraine and other countries 1

KINDS OF BUSINESS ACTIVITY Nonprofit managing Entrepreneurship The capacity and willingness to undertake conception, organization, and management of a productive venture with all attendant risks, Independent systematical economic activity that OBJECTIVES while seeking profit as a reward Not seeking profit as a reward 2

KINDS OF BUSINESS ACTIVITY Nonprofit managing Entrepreneurship The capacity and willingness to undertake conception, organization, and management of a productive venture with all attendant risks, Independent systematical economic activity that OBJECTIVES while seeking profit as a reward Economic, social, and other results Not seeking profit as a reward 3

SUBJECTS OF BUSINESS ACTIVITY Economic organizations Private Entrepreneur Business Units Business entity (Civil Code of Ukraine) Citizens of Ukraine, Foreigners, Individuals without Citizenship Branches, Administration Offices, other Business Units of Economic Organizations Enterprises (Commercial Code of Ukraine) Entrepreneurship Enterprise – independent subject of business activity, created by competent state body or by municipal body, or by other subjects for satisfaction of social or private needs means systematical realization of production, research, trade and other activity Nonprofit economic activity 4

Life Cycle of Enterprise CREATION OPERATION What can happen with a defaulter: • Disposal of debtor’s property; • Accord and satisfaction • Sanitation • Liquidation. STOP OF ACTIVITY Reorganization Merger Takeover Takeoff Sharing Transformation Liquidation Because of personal interest of businessman; Because of expired license; Because of expiry of businessman; Because of court decision

TYPES OF BUSINESS ACTIVITY General Extreme Operational Financial Investment According to Accounting Standard П(С)БО Innovative, Foreign Trade Activity 6

2. LEGAL BASE FOR THE ENTERPRISE ACTIVITY 7

ARTICLES OF ASSCOCIATION LAWS OF UKRAINE that regulate ORGANIZATION OF TAXATION, PLANNING AND REALIZATION OF PUBLIC FINANCE, ORGANIZATION OF INVESTMENT, LABOR PAYMENT, CTRTIFICATION OF GOODS, NORMING AND STANDARTIZATION, INDORMATION, BANK SERVICES, PRIVATIZATION OF THE STATE PROPERTY AND OTHER ASPECTS OF ENTERPRISE ACTIVITY COMMERCIAL CODE OF UKRAINE TAX CODE OF UKRAINE, CIVIL CODE OF UKRAINE LOWS OF UKRAINE «about ENTREPRENEURSHIP» (CH. 4), «about PROPRERTY» , «about STOCK COMPANIES» , «about COMMERCIAL COMPANIES» , «about BANKRUPTCY» , «about PROTECTION OF ECONOMIC CONCURENCE» , «about BANKS AND BANK ACTIVITY» AND OTHER CONSTITUTION OF UKRAINE 8

Articles of association Decision about setting up or Charter (articles) Articles of incorporation Content: Name of enterprise, Objective and subject of business activity, Structure and competences of its executive board, Procedure of decision making, Procedure of sharing of property, Procedure of profit/loss distributionв, Conditions of its reorganization and liquidation, if statutory 9

3. Kinds of enterprises and incorporation in Ukraine and other countries 10

Kinds of enterprises (1) According to property form: Private enterprise, в т. ч. farm enterprise, rented enterprise with international investment foreign enterprise Collective enterprise production co-operatives consumers’ cooperative society enterprises of public and religious organizations other 11

Kinds of enterprises (2) Utility enterprise State enterprise state commercial enterprises official enterprises Enterprises with mixed property 12

Kinds of enterprises (3) According to way of foundation and making up of authorized capital : Unitary enterprises state, utility, based on property of citizens’ union (public organization, political party), religious organization or private property of a founder. Corporations co-operative society, commercial companies. 13

Translating types of companies Type of company Designation Country of use Public Limited Company PLC England, Ireland other countries of British Law (not USA) Limited Ltd. All English speaking countries; offshore Incorporated Inc. USA, offshore (not England Ireland) Corporation Corp USA, offshore Limited Liability Company LLC USA, offshores under US Law Limited Duration Company LDC Offshores under British Law (Cayman islands) 14

Translating types of companies Type of company Designation Country of use International Business Company IBC Some offshores (Bahamas, British Virgin Islands, Belize and other) International Company IC Other offshores (Cook Islands) and Company &Co All English speaking countries Limited Partnership LP All English speaking countries 15

Translating types of companies Type of company Designation Country of use Sosiedad Anonima Societe Anonyme SA France, Spain, Belgium, Switzerland, offshores, Panama etc Societe a Responsidilite Limitee SARL, SRL France, Italy, offshore Vennootschap Met Beperkte Aansparkelij kheid BV Netherland, Anthill Islands, Some offshores Naamlose Vennootschap NV Netherlands, Belgium, Surinam, Anthill Islands Gesellschaft mit beschränkter Haftung Gmb. H Germany, Austria, Switzerland, some offshores Aktiengesellschaft AG Germany, Austria, Switzerland, some offshores 16

Kinds of enterprises (4) According to workers’ number (average annual quantity) and annual gross output: Small enterprises(no more than 50/70 Mio. HRN) Big enterprises (more than 250/ 100 Mio. HRN) Medium enterprises According to subordination: Branch Controlling company 17

Incorporation of enterprises Types of incorporation State (utility) incorporations Commercial incorporations ( by decision of Cabinet Council of Ukraine, Ministries, Municipalities etc. ) (by enterprises’ decisions) Types Association Corporation Consortium Concern Industrial-financial group Holdings Other incorporations (unions, alliances etc) 18

Main tools of the state regulations of business activity Public contract Licensing, Patenting, and Quoting Certification and Standardization Specification and Limits usage Prices and Tariffs regulation Investment, tax, and other privileges Subsidy, Compensations, Target Innovations 19