Non-financial corporations (S.11)

2.21 . Definition:

The sector non-financial corporations (S.11) consists of institutional units whose distributive and financial transactions are distinct from those of their owners and which are market producers (see paragraphs 3.31., 3.32. and 3.37.), whose principal activity is the production of goods and non-financial services .

2.22 . The sector non-financial corporations also includes non-financial quasi-corporations.

2.23 . The term 'non-financial corporations' denotes all bodies recognised as independent legal entities which are market producers and whose principal activity is the production of goods and non-financial services.

The institutional units covered are the following:

a) private and public corporations which are market producers principally engaged in the production of goods and non-financial services;

b) co-operatives and partnerships recognised as independent legal entities which are market producers principally engaged in the production of goods and non-financial services;

c) public producers which by virtue of special legislation are recognised as independent legal entities and which are market producers principally engaged in the production of goods and non-financial services;

d) non-profit institutions or associations serving non-financial corporations, which are recognised as independent legal entities and which are market producers principally engaged in the production of goods and non-financial services ;

e) holding corporations controlling (see paragraph 2.26.) a group of corporations which are market producers, if the preponderant type of activity of the group of corporations as a whole - measured on the basis of value added - is the production of goods and non-financial services;

f) private and public quasi-corporations which are market producers principally engaged in the production of goods and non-financial services.

2.24 . The term 'non-financial quasi-corporations' denotes all bodies without independent legal status which are market producers principally engaged in the production of goods and non-financial services and meet the conditions qualifying them as quasi-corporations (see paragraph 2.13. f).

Quasi-corporations must keep a complete set of accounts and are operated as if they were corporations. The de facto relationship to their owner is that of a corporation to their shareholders.

Thus non-financial quasi-corporations owned by households, government units or non-profit institutions are grouped with non-financial corporations in the non-financial corporations sector.

The existence of a complete set of accounts, including balance sheets, is not a sufficient condition for market producers to be treated as quasi-corporations. Therefore, partnerships and public producers, other than those included under 2.23. a, b, c and f and sole proprietorships - even if they keep a complete set of accounts - are in general not distinct institutional units because they do not enjoy autonomy of decision, their management being under the control of the households, non-profit institutions or governments which own them.

2.25 . The sector non-financial corporations also includes all notional resident units (see paragraph 2.15.) which, by convention, are treated as if they were quasi-corporations.

2.26 . Control over a corporation is defined as the ability to determine general corporate policy by choosing appropriate directors, if necessary.

A single institutional unit (another corporation, a household or a government unit) secures control over a corporation by owning more than half the voting shares or otherwise controlling more than half the shareholders' voting power. In addition, government secures control over a corporation as a result of special legislation decree or regulation which empowers the government to determine corporate policy or to appoint the directors.

In order to control more than half the shareholders' voting power, an institutional unit needs not own any of the voting shares itself. A corporation C could be a subsidiary of another corporation B in which a third corporation A owns a majority of the voting shares.

Corporation C is said to be subsidiary of corporation B when: either corporation B controls more than half of the shareholders' voting power in corporation C or corporation B is a shareholder in C with the right to appoint or remove a majority of the directors of C.

2.27 . The sector non-financial corporations is divided into three sub-sectors:

a) public non-financial corporations (S.11001);

b) national private non-financial corporations (S.11002);

c) foreign controlled non-financial corporations (S.11003);