Overview of a Luxury Fashion Brand Essay Example

Overview of a Luxury Fashion Brand Essay The fashion industry is very competitive. Company that venture in fashion should therefore have a proper marketing strategies that will make it have competitive advantage over the other companies. Most companies engaging in fashion have therefore turned to luxury brands being that there is global interest in fashion. Based on the environment that the businesses operate, the target markets and product attributes as well as marketing methods, the companies have embraced luxury brand management and fashion marketing traceries that have made them be on top of the fashion industry. This paper looks at one Barberry as a luxury brand that has been successful despite the challenges that have existed in the fashion market. In this paper an overview of Barberry is given based on its success in the industry. The brand has been outstanding and is defined by the Brutishness, independent luxury positioning and heritage as well as history. Compared to other brands in the fashion industry such as Pravda, Ezra and Ralph Lauren, the brand has been doing fairly well. Brands Brief History Barberry is a distinctive global luxury brand that was founded in 1856. The group has a British background. Over the years the company has built a strong and outstanding reputation for innovation, design, and craftsmanship (Hag, 2004). The group has much focus on outwear, best known for its trench coats. We will write a custom essay sample on Overview of a Luxury Fashion Brand specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Overview of a Luxury Fashion Brand specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Overview of a Luxury Fashion Brand specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The company designs, produces as well as sell products under the Barberry brand. The company based in London sources its raw materials from UK and other external suppliers it forms network with. The content of marketing as well as marketing programs; analogue and digital, are internally designed to promote the brand and product features to the consumers. Being that its products are sold globally through proprietary retail shops as well as third party wholesale customers, the brand needs a strong fashion marketing strategy to counter the competition in the fashion world. Marketing is in fact one of the core corporate functions that keeps the brand at par. The brand has also embraced digital marketing as one of the method it uses to remain competitive in the market that is dominated by other super- brands in the luxury fashion industry (Group Overview, n. D. ). Brands Product attributes and Target Market The brand being inclined to British lifestyle has a range of products that argues men, women and children of different social status in the society. It is best known Of shawls, scarves, and ties that are classified as soft accessories. On the other hand the brand has also classified small leather shoes, handbags, wallets, umbrellas, and wristwatches as hard accessories. The products are also tailored to meet individual needs (Tungsten, 2009). For example the brand also classifies products as seasonal and continuity. Continuity includes the iconic trench coats that are durable whereas the former refers to the short lived products such as responsive fashion trend that covers a limited season. The multilevel brand strategy of the company is organized at six major brand levels. First off, the high fashion range that serves the fashion shows and editorial coverage, which is produced in small quantities to satisfy the customers exclusivity, demand. This range targets the affluent customers and is distributed through Barberry flagship stores and other prestigious stores in America and London such as Barneys and Harrows. The second range is the London line that is a ready to wear range that is presented in two collections based on the four seasons. Womens wear usually has more lines compared to menswear. Menswear has also been tailored to meet sportswear accessories such as towels, shoe and bags as well as swimwear (Group Overview, n. D. ). There is also the Thomas Barberry range that targets the youths between 15 and 25 years of age, customer group. This group falls under diffusion brands and is available in Spain, UK and Europe. The other two diffusion brands are Barberry blue and black that is for the Japan fashion market. They are also targeted for younger male and female professionals. The multi-brand model of the company has provided maximum market exposure and extensive consumer demand. The second benefit Of the model is that, it has provided elasticity and market awareness evidenced by the brands that target specific countries. Additionally, the approach of having broad category of products range and differential pricing options have provided a marketing move for the company since the customers have accessed it on that account as well as enable the trading up and down of the brand levels (Group Overview, n. D. ).. The brand is known for its trench coats that target the young audience. The product has been marketed through websites such as retrenchment. Mom and celebrity endorsement (Grieve, Didactic, Tibias, 2013). Distribution channels of the Brand The brand is exclusively done through the operation of company stores, licensee agreement, and third party stockings. The company has a retail chain that comprises of four formats. These include designer outlet stores, department stores, regular retail price and flagship stores located in nearly all the major cities in Europe and London. The whole sale stockings include the prominent department stores, duty free shops and specialty fashion retailers. The brand also operates Showrooms in London, Milan, and Hong Kong mongo others. Additionally, the brand also employs the use of agents who make direct sales to the wholesale customers so as to increase sales of the products as well as encourage the sale of the products at the marked prices (The luxury-goods market: Disillusioned hedonist shoppers The Economist, n. D. ). The consistency of visual merchandising of the brand as well as its store presentation of the brand is maintained through a shop-in shop strategy that is implemented in department stores. The company maintains relationship with its wholesale customers by making accessible brand offer and other brands. Additionally, they engage in collaborative marketing action with the important clients (Hag, 2004). Through this the wholesale consumers are able to have access to allowances following the advertisement of Barberry brand products. In a nutshell, the licensee distribution engages two license partners that are jointly tinged with the duty Of wholesale distribution. The licensed partner firms are responsible for visual merchandising and sales agents. The distribution channel has been advantageous of the brand. It provides the presentation of the brands products in diverse and important markets. The model also allows for the return on investment since none of the profit is lost in paying franchise partners and other partners. Marketing methods The gabardine which was water resistant and meant for the military outfits made the brand famous not only in England but also all over the world. Having been hit by economic downfall, the marketing department had to strengthen its strategies so as to boost its sales. To keep at the level of other brands it had to focus on digital media as one of its core strategies (Grieve, Didactic, Tibias, 2013). The company benchmark other well established rands such as Apple, Nikkei and Google, to establish a unique and distinct model for the brand. Using these iconic brands it was able to use the social media with the aim of developing a campaign that was innovative and inclusive of the young consumers. The brand was outstanding, fashion forward and autonomous. This was and is still recorded in its trench coats that are iconic and are fond for the soldiers, celebrities, and working class (Grieve, Didactic, Tibias, 2013). The unique status of the luxury brand was built upon the unique product; the trench coats. Additionally, most street photography has recognized the brand from the same. In 2009 most people were aware of the brand and about a million making it the largest luxury brand in the fashion industry at that time (Digital marketing case study Social media case study: Barberry encourages customer participation with Art of Trench Digital Training Academy, n. D. ). The idea of the social media gave a revelation of the Art of the Trench campaign. The brand established its website where it was very easy for the customers to share their photos wearing products from the luxury brand. This was a form of reaching more customers who would visit the website and admire those photographs. Coupled with the partnership with Scott Chasm; a fashion flogger, the brand was able to amass a mammoth of consumers within a short period of time. The photos could be liked and shared by both customers as well as the potent Customers. The digital campaign placed the brand over others in the luxury sector. The success of the campaign boosted the e-commerce sales by almost fifty percent making the company to allocate more of its resources in digital marketing (Hill, 2014). Apart from social media, the brand also uses advertising, fashion stores, and editorial placement as its core marketing Hansel (Hines Bruce, 2001). They have an advertisement strategy that is launched twice every year. The advertisement campaigns are more focused in the leading fashion and lifestyle publications such as fashion magazines. The brand has cut its expenditure for media advertisement (Hines Bruce, 2001 The ads focus mainly on the brands history and heritage. The emphasis IS well placed on the company logo, trademarks. The adverts not only feature individual products but also aim at presenting the whole brand image demonstrated through diverse brand product range (Hill, 2014). The fast ion wows are also marketing channels for fashion. As a marketing move, Barberry appreciates the fashion shows as marketing plans that serve to inspire the luxury grade of the brand (Us, Coppery, Videophones Network, 2008). The shows are held in different periods depending on the brand. For example, the fashion shows are held twice a year in Milan. The city is well known for its luxury fashion heritage serves to market the brand internationally. Apart from establishing the fashions credibility, the shows also ensure international press representation (Chevalier Mozzarella, 2012). In London there is a fashion week every season in all designated London showrooms (Cooke, 2014). Editorial coverage aims at reinforcing the luxury brand positioning as well as creating brand awareness (Chevalier Mozzarella, 2012). Barberry has a strong public relations tactic that focuses on trade and fashion press. The strategy is inclusive of the whole world editorial coverage and annotations that are for the support of the brand. This ensures proper placement of the brand as the leading brand in fashion, trade, business and publications (Eases, 2009). Another important marketing overage is the brochures that are unleashed every season to market the collections to the consumers and wholesale as well as retail customers (Eases, 2009). The brand also has a website that further creates its awareness. The website that is up to date provides a brief history of the brand, the current images of the product, and the adverts representing the brand (Leverage the Franchise, n. . ). In the fashion show marketing, the brand has had a unique way of hitting the market. Recently in the London Fashion week, it made it possible for its customers to stream the fashion show live in 2010. This makes it the first brand to go live in AD all over the world. As evidenced by the proper use of technological inventions that have placed the company above the other competitors, other brands in the fashion industry should embrace the same m ethod to stay up in the market (Cooke, 2014). As a move of embracing technology Barberry also launched it mobile site in 201 0 making it possible for the customers to interact with the products from their smart phones, pads and tablets. This has continuously expanded its customer base globally being that most consumers use the same in communication and hopping at the same time (Strata, 2013. The marketing model of the luxury brand has made it recognize the importance of advertising in the creation of the brands image. The brand is widely known both in London and all over the world because of its unique advertising campaigns. The brand has come up with outstanding marketing strategies that have targeted various audiences. This move makes it do well in the luxury sector since they are unique and exclusive for the brand. The target market of the goods is well defined through the products and the fact that they can easily reach the goods at heir convenience makes it easier for the company to make huge profits. Luxury brand management spurs almost over all the actions Of the company form production, distribution, marketing and sales. Barberry as a luxury brand, have taken into consideration all the aspects of fashion marketing embracing the methods of marketing that assure large outreach such as the social media. The social marketing technique not only creates awareness of the brand but also creates a channel through which the company can interact with its customers and be able to get their feedback. This is then followed by wife analysis and mechanism implementation to meet the customer demands. In a nutshell, the paper has focused on what has made Barberry become one of the most recognized and successful luxury brands in the world of fashion market.

A Tale Of Two Cities Essays (470 words) - Literature, Free Essays

A Tale Of Two Cities Essays (470 words) - Literature, Free Essays A Tale of Two Cities A Tale of Two Cities has long been one of Charles Dickens' most favored books. This book opens in the year 1775 by contrasting two cities: Paris, France and London, England. Throughout this story various characters are "recalled to life", meaning that they have had a new chance at life. Dr. Manette is clearly mad after being in prison for eighteen years. When Lucie, the Dr.'s daughter, and Mr. Lorry eventually nurse the doctor back to a healthy state and out of his insane state they had "recalled him to life." Dr. Manette was nursed from an insane state with no real life to a sane one with a very functional life. In doing this Lucie and Mr. Lorry, in a way, gave Dr. Manette's life back to him or "recalled him to life." Another instance in which someone is "recalled to life" involves Charles Darnay. Charles Darnay is on trial for treason in England(Book 2, Ch.2-4). C.J Stryver and Sydney Carton are representing Darnay in this trial. Sydney Carton saves Darnay from death in this trial with his miraculous wits. Through this Darnay is given another chance at life ,and therefore was "recalled to life." The last and most significant instance of someone being "recalled to life" is found in the last chapters of this book. Sydney Carton has recently switched places with his look alike, Darnay, and is awaiting the guillotine. While Sydney awaits his death he thinks, "It is a far, far better thing that I do, then I have ever done, it is a far, far better rest that I go to than I have ever known." Through these words Sydney recognizes that by sacrificing his life for Darnay, a loved one of Lucie, he will be doing the best thing that he has ever done and can do. Sydney is finally satisfied with himself, he is no longer a drunken fool, but a hero that now can live or die with himself. By dying, and saving Darnay for Lucie, Sydney Carton is "recalled to life." Throughout this book "recalled to life" has been the most important theme. Almost all of the main characters in this novel were "recalled to life." This theme was the most important because it allowed us, the readers, to see the characters trates being used by them and to understand how much a character would do for another. When Carton represented Darnay on trial and saved his life we saw how smart Carton was. In the last instance of "recalled to life" we saw how much Carton really felt for Lucie when he saved Lucie's husbands life in return for his own. The theme "recalled to life" is seen throughout this novel and should be recognized as one of the most important.

Copper Age Cemetery

Varna Bulgaria - Eneolithic/Copper Age Cemetery Varna is the name of a Eneolithic/Late Copper Age cemetery located in northeastern Bulgaria, slightly inland of the Black Sea and north of the Varna Lakes. The cemetery was used for about century between 4560-4450 BC. Excavations at the site have revealed a total of nearly 300 graves, within an area of approximately 7,500 square meters (81,000 square feet or approximately 2 acres). To date, the cemetery has not been found to be associated with a settlement: the closest human occupation of the same date consists of 13 pile-based lake dwellings, located near Varna Lakes and thought to be of approximately the same period. However, no connection to the cemetery has been established as of yet. Grave goods from Varna included an enormous amount of goldwork, a total of over 3,000 gold objects weighing more than 6 kilograms (13 pounds). In addition, 160 copper objects, 320 flint artifacts, 90 stone objects and more than 650 clay vessels have been found. In addition, over 12,000 dentalium shells and about 1,100 Spondylus shell ornaments were also recovered. Also collected were red tubular beads made from carnelian. Most of these artifacts were recovered from elite burials. Elite Burials Of the 294 graves, a handful were clearly high status or elite burials, probably representing chiefs. Burial 43, for example, included 990 gold artifacts weighing 1.5 kg (3.3 lb) alone. Stable isotope data suggests that the people at Varna consumed both terrestrial (millet) and marine resources: human remains associated with the richest burials (43 and 51) had isotope signatures that indicated higher percentage consumption of marine protein. A total of 43 of the graves are cenotaphs, symbolic graves containing no human remains. Some of these contained clay masks with gold objects placed in what would be the location of eyes, mouth, nose and ears. AMS radiocarbon dates on animal and human bones from burial contexts returned calibrated dates between 4608-4430 BC; but most artifacts of this type date to the later Eneolithic period, suggesting that the Black Sea location was a center of social and cultural innovation. Archaeology The Varna cemetery was discovered in 1972 and excavated well into the 1990s by Ivan S. Ivanov of the Varna Museum, G. I. Georgiev and M. Lazarov. The site has not been as yet been completely published, although a handful of scientific articles have appeared in English language journals. Sources This article is a part of the About.com guide to the Chalcolithic, and the Dictionary of Archaeology. Gaydarska B, and Chapman J. 2008. The aesthetics or colour and brilliance - or why were prehistoric persons interested in rocks, minerals, clays and pigments? In: Kostov RI, Gaydarska B, and Gurova M, editors. Geoarchaeology and Archaeomineralogy: Proceedings of the International Conference. Sofia: Publishing House St. Ivan Rilski. p 63-66. Higham T, Chapman J, Slavchev V, Gaydarska B, Honch NV, Yordanov Y, and Dimitrova B. 2007. New perspectives on the Varna cemetery (Bulgaria) – AMS dates and social implications. Antiquity 81(313):640-654. Honch NV, Higham TFG, Chapman J, Gaydarska B, and Hedges REM. 2006. A palaeodietary investigation of carbon (13C/12C) and nitrogen (15N/14N) in human and faunal bones from the Copper Age cemeteries of Varna I and Durankulak, Bulgaria. Journal of Archaeological Science 33:1493-1504. Renfrew C. 1978.  Varna and the social context of early metallurgy.  Antiquity 52(206):199-203.

(a)Explain why, in equilibrium, all assets must lie on or below the Essay

(a)Explain why, in equilibrium, all assets must lie on or below the capital market line, but must lie on the security market line.(b)To what extent does recent - Essay Example In real life, equilibrium is a constantly moving target. We cannot say that the stock market is in equilibrium at the end of the day or week or year. Prices move based on the perception of brokers and shareholders, driven by information (Fama, 1970), psychology (Kahneman and Tversky, 1982), or anything under the sun (Barberis, Shleifer, and Vishny, 1998). As investors try to maximise returns or minimise losses, they either push up or pull down stock prices, or keep it level, the differences between the demand of buyers and the supply of sellers being reflected in stock price changes. This is equilibrium, which is not a static point but more of a dynamic process where adjustments constantly take place, reflecting the free agreement of investors in the market that stocks are bought and sold at the right price. Of course, one side thinks the price will go up, while the other side thinks it will go down. By ‘assuming’ equilibrium as an ideal state towards which everything moves, finance academics have discovered a tool that allows them to pin down a moving target – the behaviour of stock prices over the last fifty years, for example – so they can study it, test their theories, develop a mathematical model, and see if the model explains reality. One such aspect of reality that is being studied for the last half a century is the relationship between the return of a stock price and the risk that the return will not be realised. Several years of observations have made academics ask: how should investors decide which stocks to buy? This is what Markowitz did in his paper (Markowitz, 1952), where he drew attention to the practice of portfolio diversification. After observing that stock prices move differently in relation to the general movement of the stock market, he showed that investors could reduce the unpredictability of returns by investing in a mixture or portfolio of stocks whose

Art in America - Abstract Expressionism Research Paper

Art in America - Abstract Expressionism - Research Paper Example The paper "Art in America - Abstract Expressionism" investigates the important style of American style, abstract expressionism. The movement was unregistered but strong. Some of its members included: Jackson Pollock (1912–1956), Willem de Kooning (1904–1997), Franz Kline (1910–1962), Lee Krasner (1908–1984), Robert Motherwell (1915–1991), William Baziotes (1912–1963), Mark Rothko (1903–1970), Barnett Newman (1905–1970), Adolph Gottlieb (1903–1974), Richard Pousette-Dart (1916–1992), Clyfford Still (1904–1980). All these members were committed to the audacious formal inventions in searching for significant substance. Their objective was to break away from normal subject matter and technical conventions. Their artistic works included head stoned scales works that were created to reflect their personal psyches. Doing this helped them to tap into worldwide inner sources. These artists attributed a lot of importa nce to spontaneity and improvisation as process accorded the highest significance. Their works resisted stylistic classifications, but emphasised on dynamism and energetic gesture rather than reflective and cerebral focus on color. Abstracts acted primarily as their imageries. Highly abstracted modern art was favored by the group even when depicting images founded on visual realities. Abstract expressionism is not a specific style within abstract art, but an American group or artists rebelled and formed an independent group which would give them a favorable environment.

Global Warming Outline Essay Example for Free

Global Warming Outline Essay Pierre de Fermat was born in Beaumont-de-Lomagne, France in August of 1601 and died in 1665. He is considered to be one of the greatest mathematicians of the seventeenth century. Fermat is considered to be one of the fathers of analytic geometry. Fermat along with Blaise Pascal is also considered to be one of the founders of probability theory. Fermat also made contributions in the field of optics and provided a law on light travel and made wrote a few papers about calculus well before Isaac Newton and Gottfried Leibniz were actually born. Fermats most important work was done in the development of modern number theory which was one of his favorite areas in math. He is best remembered for his number theory, in particular for Fermats Last Theorem. This theorem states that: xn + yn = zn has no non-zero integer solutions for x, y and z when n is greater than 2. Fermat almost certainly wrote the marginal note around 1630, when he first studied Diophantuss Arithmetic. It may well be that Fermat realized that his prove was wrong, however, since all his other theorems were stated and restated in challenge problems that Fermat sent to other mathematicians. Although the special cases of n = 3 and n = 4 were issued as challenges the general theorem was never mentioned again by Fermat. In fact in all the mathematical work left by Fermat there is only one proof. Fermat proves that the area of a right trangle cannot be a square. See more: what is essay format Meaning that a rational triangle cannot be a rational square. In symbols, there do not exist integers x, y, z with x2 + y2 = z2 such that xy/2 is a square. From this it is easy to deduce the n = 4 case of Fermats theorem. The proof of Fermats Last Theorem marks the end of a mathematical era. Since all of the tools which were brought to bear on the problem still had to be invented in the time of Fermat. Judging by the tenacity with which the problem wa for so long, Fermats alleged proof seems likely to have been illusionary. This conclusion is further supported by the fact that Fermat searched for proofs for the cases and , which would have been superfluous had he actually been in possession of a general proof.

Abolition Essay -- essays papers

Abolition A Stronger Resistance The abolitionist movement in the United States sought to eradicate slavery using a wide range of tactics and organizations. The antislavery movement mobilized many African Americans and some whites who sought to end the institution of slavery. Although both black and white abolitionists often worked together, the relationship between them was intricate. The struggle for black abolitionists was much more personal because they wanted to end slavery and also wanted to gain equal rights for blacks. However, many white abolitionists only sought to end slavery and did not fight for equality for blacks. From these exceedingly contrasting perspectives and the continuation of slavery, the sentiment of many abolitionists became more militant and radical; some abolitionists began to use more violent methods of resistance to abolish slavery. Before the 1830s most antislavery activists stressed gradual emancipation. These feelings were expressed mainly by Southern whites, some possessing a fear of free blacks not being ready for freedom and others holding beliefs that slavery would gradually disappear (Notes, 10/18/00). Generally, only black abolitionists demanded an immediate end to slavery. This difference in opinion contributed to some blacks taking more violent measures to gain freedom and equality. Further contributing to the more aggressive tactics were the goals of the white abolitionists. Many white abolitionists were not able to accept blacks...

Coming of Age-Portrait of an Artist

A Portrait of the Artist as a Young Man is a complete work of art, complete in the sense that it gives such great insight to human nature and the people of the world. The title is essentially what this novel represents. The â€Å"coming of age† is represented like a portrait because it takes a long time, with many different attempts, to reach the final work of art. In even greater context, the protagonist experiences a series of epiphanies in which he gains insight into his own nature and into the people of the world. In the main characters â€Å"coming of age† there are crucial components that are lost and gained, which can be derived from his love of family, religion, and art. Stephen Dedalus, the main character, is what many would consider a typical boy with a normal childhood. His family loves him and they support him with essentially anything he would need. Stephen is taught well as a young boy whose parents grapple with many problems for themselves, yet always seem to show the difference between right and wrong. As Stephen grows older his family’s struggles become his own problem whenever finances force them to move, therefore making Stephen the new kid at school. †No life or youth stirred in him as it had stirred in [his father and his friends]. He had known neither the pleasure of companionship with others nor the vigour of rude male health nor filial piety. Nothing stirred within his soul but a cold and cruel and loveless lust. His childhood was dead or lost and with it his soul capable of simple joys and he was drifting amid life like the barren shell of the moon. (76) School shows to be a challenge in itself as he has problems fitting in, but eventually he finds his place in the â€Å"social circle†. As Stephen grows even older and moving now into his teenage years family is becoming one of his lesser problems. Although his family may not always physically be there, Stephen has roots for his mind and soul which his family created for him. In a way these ideals can be looked at as good or bad, the good being that he is from Ireland and it is tradition, the bad being that his family may be the source of the rest of his problems later in life. Religion to Stephen is a very important matter. From the time he was a little boy, the Catholic religion and the fear of God had been instilled in him. For this, Stephens traditional Irish upbringing is to blame. As for religion becoming a problem for him, it arose after his first sexual experience with a prostitute. †His soul had arisen from the grave of boyhood, spurning her grave-clothes. Yes! Yes! Yes! He would create proudly out of the freedom and power of his soul, as the great artificer whose name he bore, a living thing, new and soaring and beautiful, impalpable, imperishable. (133) Stephen had been introduced to the world of sin and was now indulging in gluttony and greed. †He turned to appease the fierce longings of his heart before which everything else was idle and alien. He cared little that he was in mortal sin, that his life had grown to be a tissue of subterfuge and falsehood. Beside the savage desire within him to realize the enormities which he brooded on nothing was sacred. †(79)Stephen is happy at first by the man he has become, but after he has a religious retreat, things quickly change. This is where his first epiphany comes in and he decides that he must seek god’s forgiveness and straighten his life out. It seems as if this small streak of sin was a minor setback for Stephen, and he is now disgusted with himself knowing what awaits him after death if he continues. As time goes by Stephen becomes more religious and manages to block out his temptations. The fact that the temptations are still there though worries him, and he wonders if he has really corrected himself. Stephen then faces many problems, from home to school, where he begins to question faith and religion once again. This is where the second epiphany comes in. After some thought Stephen decides that he must pursue his ambitions and live his life freely without inhibitions. Throughout Stephen’s early life the idea of art is almost lost for him. Stephen always has the idea of art in his mind and can be considered his one true love. The ambition of art did not always influence his thinking and ideals until later in his teenage years. The challenges and mental boundaries he experiences can contribute to the artist he wants to become, therefore making him very open minded artist with traditional Irish roots. Stephen was a confused boy who was on his own personal pursuit of happiness. Stephen was fortunate enough to realize that the choices he made before adulthood would effect the rest of his life. With that in mind, Stephen’s â€Å"coming of age† causes him to lose some things, while at the same time gaining others. The main part of Stephens â€Å"coming of age† was his transformation between one of religious conformity and one free of inhibitions as an artist. â€Å"I mean, said Stephen, that I was not myself as I am now, as I had to become. †(193)

The Securities Market in Vietnam

The Securities Market in Vietnam – 14 March 2007 This article is an introduction to the legal framework that governs the securities market in Vietnam, in particular public offers, listing, public companies and buying shares. This article focuses on the provision of Law 70-2006QH11 of the National Assembly on Securities (Law 70) and Decree 14-2007-ND-CP of the Government dated 19 January 2007 Providing Detailed Regulations for Implementation of a Number of Articles of the Law on Securities (Decree 14) .The MOF is to shortly issue a regulation to further provide guidance to the SSC on regulating and establishing investment funds, securities companies and fund management companies. An update will be provided once the regulation has been promulgated. 1. 1. 1 Relevant bodies The State Securities Commission (SSC) The SSC is the official regulator of the stock exchange, and is overseen by the Ministry of Finance (MOF). The HCMC Securities Trading Centre (HCMCSTC) The HCMCSTC is an ad ministrative unit of the SSC.It is a securities trading and listing market and offers and official mechanism through which new government bonds are issued and is the secondary markets for several existing bonds. Currently, the HCMCSTC is an administrative unit under the SSC. Under Law 70 it is to covert to either a Stock Exchange or a Securities Trading Centre in the form of a limited liability company or a shareholding company by July 2008. It is expected that the HCMCSTC will be converted into a Stock Exchange. 1. 2 1. 3 The Hanoi Securities Trading Centre (HASTC) The HASTC is an administrative unit of the SSC.It is a securities trading and listing market and offers and is also Vietnam’s official over-the-counter market for securities. Under Law 70 it is to covert to either a Stock Exchange or a Securities Trading Centre in the form of a limited liability company or a shareholding company by July 2008. It is expected that the HASTC will be converted into a Securities Tradin g Centre. 2. Public offer (PO) In Vietnam the processes of a public offer (PO) and listing are different, although companies may do the two simultaneously.A PO is an offer to sell shares, bonds or fund certificates via the mass media, or to at least 100 investors excluding institutional investors or to an unspecified number of investors. 2. 1 Participants (a) The issuer or issuing organization. This is the enterprise making the PO. The securities may be listed or unlisted. Underwriters. Securities in a PO may be distributed by underwriters. Underwriters must be securities companies authorized to underwrite issues of securities or a commercial banks approved by the SSC to underwrite issues of bonds, on conditions regulated by the MOF.The role of the underwriter is to assist the issuer to complete procedures prior to the PO, to purchase the securities for resale or the unsold portion of the securities from the issuer, and to assist the issuer to distribute the securities to the public . Custodian banks. These are commercial banks that are either domestic or foreign invested (that is, not an offshore licensed bank) and are licensed to carry out securities depository activities including the keeping and maintaining of securities.  © Allens Arthur Robinson – Vietnam Laws (b) (c) (d) Investors. Investors who wish to purchase securities may be Vietnamese or foreign investors but foreign investor must first apply for a securities trading code. Foreign investment is also subject to limitations (discussed below). 2. 2 Currency and par value Securities offered by a PO must be denominated in Vietnamese dong. The par value for shares and fund certificates is VND10,000 and the minimum par value for bonds is VND100,000. Conditions for a PO (a) Shares.An issuer of shares must be a shareholding company with paid-up capital of at least VND10 billion at the time of registration of the PO, must have made a profit in the year prior to the PO and must not have accumulated l osses as at the year of registration of the offer. The general meeting of shareholders1 of the issuer must pass an issue plan and plan for utilization of the proceeds earned. 2. 3 Under Decree 14 other specific conditions apply to newly established enterprises conducting an initial public offer if the enterprise is in the infrastructure or high-tech sectors.These conditions include the obligation for there to be an underwriter, and the obligation for there to be a bank supervising utilization of the proceeds earned from the offer. (b) Bonds. An issuer of bonds must have paid-up capital of at least VND10 billion at the time of registration of the PO, must have made a profit in the year prior to the PO, must not have accumulated losses as at the year of registration of the offer and must not have more than 100 overdue debts payable. The board of management or members’ council of the issuer (as applicable) must pass an issue plan and plan for utilization and repayment of the pro ceeds earned.The issuer of bonds must also give an undertaking to investors to discharge it obligations. In the case of convertible bonds the issue plan and plan for utilization proceeds must also have a plan for issuance of the shares for conversion and all plans must be passed by the general meeting of shareholders (not the board of management). (c) Fund Certificates. Issued fund certificates must have total value of at least VND50 billion. There must also be an issue plan and a plan for investment of the capital funds earned. 2. 4Prospectus Issuers of a PO must prepare a prospectus. The main contents for a prospectus are prescribed in Law 70 and the MOF has been delegated the task of creating a sample form prospectus. Among other things, the prospectus must include the financial statements of the issuer for the 2 years prior to the issue of the PO. The prospectus must be signed by the chairman of the board of management, the general director, the financial director/accountant (on ly in the case of shares and bonds) and the legal representative of the underwriter. . 5 Registration The issuer must register the PO with the SSC. To register, the issuer must submit a request for registration and attach those documents that are required by Law 70 (and which will be given more detail in specific regulations of the MOF). The documents required include the prospectus, the charter (or in the case of a PO of fund certificates, the proposed charter of the securities investment fund) and relevant resolutions and undertakings by the issuer. In the case of a PO for fund certificates the 1In the case of a enterprise with foreign owned capital that is converting to a shareholding company in combination with making a public offer of shares, Decree 14 clarifies that the issue plan and plan for utilization is passed by the owner of the enterprise with 100% foreign owned capital and the board of management of a joint venture enterprise. 2  © Allens Arthur Robinson – Vie tnam Laws contract for supervision between the custodian bank and the securities investment fund must also be submitted. The SSC has 30 days from receipt of the registration statement to certify registration. . 6 Announcement Within 7 days from certification of registration the issuer must make a public announcement in 3 consecutive newspaper issues. The announcement must stipulate the time in which investors have to register to purchase the securities. The time limit can be set by the issuer but must be a minimum of 20 days. Registration to purchase and payment of monies When an investor registers to purchase the securities it must pay the purchase price into an escrow bank account and this money will remain in escrow until completion of the PO.Allocation and delivery The issuer must allocate the securities within 90 days from the SSC’s certificate of acceptance, and physically deliver the securities to investors within 30 days from the date the offer ends. 2. 7 2. 8 3. List ing Listing is the process of taking a privately-owned organisation including an equitized or equitizing State owned enterprise (SOE) and making the transition to a publicly-owned entity whose shares can be traded on the HCMCSTC or HASTC. 3. Conditions, application and procedures for listing The regulations on the conditions, application files and procedures for listing a company are not contained in Law 70, they are contained in Decree 14. The conditions for listing on the stock exchange (of which there are currently none in Vietnam) are different from the conditions to list on a securities trading centre. However, in anticipation of the HCMCSTC converting to a stock exchange, new registrations for listing on the HCMCSTC must satisfy the conditions applicable for stock exchange listings, while existing listed companies on the HCMCSTC have two years to satisfy these conditions.Companies failing to meet these requirements will have their listing moved to the HASTC. Conditions, applic ation and procedures for listing on the Stock Exchange/HCMCSTC (a) Shares. The listing company must be a shareholding company with paid-up capital of at least VND80 billion at the time of registration for listing, must have made a profit in the two years prior to year of listing and must not have accumulated losses as at the year of registration for listing.There must not be overdue debts payable (unless a lawful reserve has been made for them) and there must be public disclosure of all debts owed to the company by officers2 and major shareholders. At least 100 shareholders must own 20% of the voting shares of the listing company, and there must be an undertaking from shareholders who are also officers of the company to hold 100% of their shares for 6 months from the date of listing and 50% of their shares for the following 6 months. Bonds.The listing company or SOE must have paid-up capital of at least VND80 billion at the time of registration for listing, must have made a profit i n the two years prior to year of listing and must not have overdue debts of more than 1 year. There must be at least 50 bondholders in any one bond issue. 3. 2 (b) 2 Officers are the members of the board of management, members of the board of controllers, director, general director, deputy director, deputy general director and chief accountant.  © Allens Arthur Robinson – Vietnam Laws (c) Fund Certificates. Issued fund certificates must have total value of at least VND50 billion. There must be an undertaking from the initial shareholdings and members of the committee of representatives of the fund to hold 100% of their shares for 6 months from the date of listing and 50% of their shares for the following 6 months. There must be at least 100 owners of fund certificates. 3. 3 Conditions, application and procedures for listing on the HASTC (a) Shares.The listing company must be a shareholding company with paid-up capital of at least VND10 billion at the time of registration fo r listing, must have made a profit in year prior to year of listing and must not have overdue debts of more than 1 year (with no current debts or financial obligations to the State). There must be at least 100 shareholders with voting shares, and there must be an undertaking from shareholders who are also officers of the company to hold 100% of their shares for 6 months from the date of listing and 50% of their shares for the following 6 months.The conditions relating to profitable business operations and overdue debts do not apply to newly established enterprises in infrastructure and high-tech sectors or equitizing SOEs. (b) Bonds. The listing company or SOE must have paid-up capital of at least VND10 billion at the time of registration for listing, and all bonds in the issue must have the same maturity date. Other types of securities. The task of stipulating conditions for listing other types of securities has been delegated to the MOF. (c) 3. 4 Registration The listing enterpris e must register with the relevant exchange or trading centre.To register the listing enterprise must submit a registration slip and attach those documents that are required by Law 70 (and which will be given more detail in specific regulations of the exchange/trading centre). The documents required include the prospectus, relevant corporate resolutions, register of shareholders/bondholders and required undertakings. The exchange/trading centre has 30 days from receipt of the registration slip to approve or refuse the application. 3. 5 Trading Current guidelines on securities, membership of the HCMCSTC/HASTCand trading in securities are contained in Circular 583 implementing Decree 1444.In time, Circular 58 should also be repealed by a new circular implementing Law 70 and Decree 14. In the interim the HCMCSTC and the HASTC continue to apply the day to day trading rules contained in the Circular 58. In addition, under Law 70, the HCMCSTC and the HASTC each are given the responsibility to issue regulations on the trading of listed securities within their respective centres. 3. 6 Other trading Securities listed on a Stock Exchange cannot be traded outside the Stock Exchange, unless otherwise stipulated in the trading rules of the Stock Exchange.In comparison, securities listed on a securities trading centre (STC) can be traded at a securities company which is a trading member of the STC. 3. 7 Taxation holidays – almost over Previously, to encourage investment in Vietnam’s securities market, various incentives were offered, 3 4 Circular 58-2004-TT-BTC of the Ministry of Finance dated 17 June 2004. Both Circular 58 and Decree 144 were issued before Law 70 and Decree 14, and must be read down to the extent of the inconsistency. 4  © Allens Arthur Robinson – Vietnam Laws ncluding preferential corporate income tax rates to companies upon listing. However, this preferential tax treatment ceased on 1 January 2007. Dividends from shares have been fr ee of personal income tax since 1994. However this very long â€Å"temporary exemption† is expected to come to an end under the proposed Law on Personal Income Tax, which was considered by the National Assembly in October-November 2006 and is expected to be passed in 2007. If passed in its current draft form, dividends from shares will be subject to personal income tax at a proposed rate of 5% from 1 January 2009. . Public companies A public company is a newly introduced concept in Vietnam. A public company is a shareholding company with any of the following characteristics: †¢ †¢ †¢ Shares have been issued via a PO. Shares are listed on the HCMCSTC or the HASTC. Shares are owned by 100 or more investors, excluding professional securities investors, and have a paid-up charter capital of VND10 billion or more. Importantly, a company does not have to be listed to be deemed a public company. New rules introduced for public companies include: 4. Filing A public com pany must lodge the public company file with the SSC within 90 days of becoming a public company. The public company files comprises the company’s charter and business registration certificate, the most recent financial statement and summarized information on its business operations scale, management organization and shareholding structure. Major shareholders A shareholder of a public company is deemed to be a major shareholder when it holds directly or indirectly (undefined) 5% or more of the voting shares the company.Upon becoming a major shareholder, the shareholder must report to the SSC and the HCMCSTC or HASTC (depending on where the shares of the public company are listed/offered). The information that must be reported is not extensive: only details of the investor (name, address) and details of the shares (number, percentage). However, important changes to this information, including a change of the number of shares in excess of 1%, must also be reported. Takeovers An offer to purchaser 25% or more of the voting shares in a public company must be made by a â€Å"public offer to acquire†.The public offer to acquire must be registered with and approved by the SSC (the law does not detail any criteria or basis for the approval) and must be announced in the mass media. Of note, if after implementation of the public offer to acquire, the acquirer holds 80% or more in the public company, the acquirer must, if the remaining shareholders so request, acquire the remaining shares at the announced price of the offer to acquire. 4. 4 Disclosure requirements A public company must publicly disclose certain information and report it to the SSC.Annually, a public company must disclose its audited financial statements. In addition, it must disclose information within a short period (24 hours, or 72 hours) upon the happening of a prescribed event, for example if an account of the public company is frozen (within 24 hours) or if a decision is made to borrow bonds with a value of 30% or more of the company’s equity (within 72 hours). 4. 2 4. 3 5  © Allens Arthur Robinson – Vietnam Laws 5. 5. 1 Foreign investors – how to purchase sharesUnlisted shares To contribute capital or purchase shares in Vietnamese enterprises, foreign investors must open a Vietnamese dong capital contribution and share purchase account (Account) at a commercial bank operating in Vietnam. All transfers of funds for the purpose of contributing capital, purchasing and selling shares, transferring capital contribution, receiving and using dividends or profits distribution, or purchasing foreign currency from authorised banks for remittance abroad and other transactions relating to any activity of capital contribution or purchase of shares inVietnamese enterprises by foreign investors must be performed through this Account. Further, this Account may only be used for capital contributions and share purchase activities. Within 2 working days from the date of opening the Account at a commercial bank, the foreign investor must register the Account with the State Bank (Department of Foreign Exchange Control). Under law, the State Bank must certify registration of the account within 5 working days, or otherwise provide written notice of its reasons for refusing to provide certification.A foreign investor is only allowed to perform receipt or payment transactions through the Account after obtaining a document on certification of account registration from the State Bank. Therefore it is important for potential investors to organize this account well in advance of the relevant share purchase date. Other than the controls over the Account, trading in unlisted shares is largely unregulated. 5. 2 Listed shares The foreign investor must apply for a securities trading code from the HCMCSTC/HASTC.The application consists of an application form and supporting documents. Unfortunately, the supporting documents that originate outside Vietn am (for example the constitution and establishment documents of the foreign investor) are subject to the tedious requirements of notarization and certification. Investors must then open a VND securities trading account with a registered broker in accordance with Decision 15505 to service activities of the purchase and sale of securities.The following accounts must be opened by the broker at an authorized bank in Vietnam: (a) a specialized, on-call foreign currency deposit account, into which foreign currency of the foreign investor is deposited (i) for the purpose of conversion into VND for purchase of securities or (ii) after conversion from VND for the purpose of remittance overseas or other authorized foreign currency remittances in Vietnam; and (b) a specialized, on-call VND deposit account, into which all VND amounts (after conversion from foreign currency) and all VND income from securities nvestment is transferred and from which all VND remittances for purchase of securities or for conversion into foreign currency is made. Listed share certificates must be centrally deposited at the Vietnam Securities Depository (VSD). This happens in two steps: first, the owner deposits the certificates with a depository member (for example, the broker or depository bank) and second, the depository member in turn deposits the certificates at the VSD. Cash settlement is made via the settlement bank, which is the BIDV. 6. 6. 1Foreign investors – restrictions Prohibited and conditional sectors Four prohibited sectors are listed in the 2005 Law on Investment. These sectors apply equally to foreign and local investors. Nine conditional sectors are listed in the 2005 Law on Investment. These sectors also apply equally to foreign and local investors. In addition foreign investment is conditional in 13 sectors specified in Decree 108 and ‘other investment sectors in international treaties of which Vietnam is a member and which restrict the opening of the 5Decision 1550-2004-QD-NHNN of the State Bank of Vietnam dated 6 December 2004. 6  © Allens Arthur Robinson – Vietnam Laws market to foreign investors’. It is not yet clear what the conditions are, and whether they may include restrictions on indirect investment. 6. 2 Other restrictions The current (to the extent that they have not been specifically repealed) laws of Vietnam consist of the following restrictions: (a) (b) (c) There is a cap on total foreign shareholdings in or capital contributions to any one unlisted domestic business of 30% of the charter capital (30% rule).The range of unlisted companies in which foreign investors may purchase shares is also restricted by sector (only 35 business lines are permitted). Foreign investors may hold a maximum of 49% of the total shares of any one company listed at a stock exchange or registered for trading at a securities trading centre (49% rule). Although not yet specifically repealed these restrictions may be affected by the 2005 Law on Investment which stipulates â€Å"investors must be permitted to invest in all sectors and in all industries and trades which are not prohibited by law†.Therefore under this general rule foreign investors should be (in theory) permitted to invest in all sectors and all industries provided that they are not in a prohibited or conditional sector (as above). It is not clear if the authorities will interpret the 30% rule and the 49% rule as being repealed by or alternatively, qualifying the Law on Investment. We consider that the better view is that these rules should be repealed by the Law on Investment. This view is consistent with the WTO principle of national treatment.However, we understand that in a meeting held on 18 January 2007 between the Government Office, the Ministry of Finance and the SSC the Government Office expressed the Prime Minister’s opinion that the 49% rule would continue to be applied ‘temporarily’. In any event, specific re strictions will continue to apply to conditional sectors (for example, banks) in accordance with commitments made under international agreements. 7. 7. 1 Securities Industry Players General Securities companies and fund management companies are the key players in the Vietnamese securities industry.This section provides an overview of the scope of activities under Law 70 of these companies Securities company As at 29 December 2006, the SSC has issued 55 operational licenses to securities companies under the previous securities law regime. After the effective date of Law 70, being 1 January 2007, there have not been any operational licenses issued and the most likely reason is that the implementing regulations for Law 70 have not been promulgated to guide the SSC in its work.Under Law 70, securities companies are permitted to engage in any or all of the following activities (the minimum legal capital is listed along side each of the activity): (a) (b) securities brokerage (VND 25 bill ion); securities self-trading (if the securities company engages in this activity it can only conduct the other activity of underwriting) (VND 100 billion); underwriting issues of securities (VND 165 billion); securities investment consultancy (VND 10 billion); financial consultancy services; and other financial services. . 2 (c) (d) (e) (f) The permitted areas of activity are limited compared to the business areas permitted under the old securities law regime. The prescribed minimum legal capital has also increased. This explains why there was a rush towards the end of 2006 to obtain a securities company license from the SSC. 7  © Allens Arthur Robinson – Vietnam Laws 7. 3 Fund Management Company Prior to the effective date of Law 70, eighteen operational licenses were issued by the SSC to fund management companies.Again there was a rush to obtain a license towards the end of 2006 because the scope of business activities has been restricted under Law 70. A fund management company can only engage in fund management and portfolio management and the minimum legal capital for establishment is VND 25 billion. 8. Funds This section provides a brief overview of investment funds as this is the subject of a detailed paper which will be released once the MOF has settled the regulation on investments funds and other related matters. Investment funds have been driving the bullish Vietnamese stock market.There have been a growing number of offshore and onshore investment funds established in recent years. At least 25 investment funds are operating in the market with an objective of investing in Vietnam. The Prime Minister has reportedly indicated that regulations on capital controls would be tightened to prevent capital flight which probably means that the MOF’s soon to be released regulations would introduce further regulatory controls on the operation of Funds. In brief, Law 70 sets the framework for the establishment of onshore public and membersâ€℠¢ funds.Public funds and members’ funds must have at least VND 50 billion in start up capital and managed by a fund management company. A public fund may be an open or closed ended fund with at least 100 investors. A members’ fund must have up to 30 investors. Assets of a fund are to be held by a custodian bank. The MOF’s future regulation is expected to contain other operational requirements. This article was written by Julia Howes, a lawyer with Allens Arthur Robinson who has been practicing in Vietnam for 3 years.Allens Arthur Robinson is one of the largest international law firms in Asia, with more than 900 lawyers, including 179 partners. Allens Arthur Robinson has been providing legal services for clients in Australia for more than 180 years and in Asia for the past 30 years. Our Vietnam practice is managed by partners Bill Magennis in Hanoi and Nigel Russell in Ho Chi Minh City, both of whom joined the Allens Arthur Robinson partnership from 1 January 200 7. The Vietnam practice was established in 1993 and is one of the largest and most successful among foreign law firms in the country.For further information, please contact: Bill Magennis Partner, Hanoi Ph: +84 4 936 0990 Bill. [email  protected] com. au Nigel Russell Partner, Ho Chi Minh City Ph: +84 8 822 1717 Nigel. [email  protected] com. au Steve Pemberton Partner, Singapore Ph: +65 6535 6622 Steve. [email  protected] com. au Jim Dunstan Executive Partner – Banking & Finance and Asia offices, Sydney Ph: +61 2 9230 4571 Jim. [email  protected] com. au Simon Lynch Partner, Melbourne Ph: +61 3 9613 8922 Simon. [email  protected] com. au Jeremy Low Partner, Sydney Ph: +61 2 9230 4041 Jeremy. [email  protected] com. au This publication is copyright.Except as permitted under relevant laws, no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner.  © Allens Arthur Robinson 8  © Allens Arthur Robinson – Vietnam Laws The material contained in Vietnam Client Updates is intended to inform you of recent legal developments in Vietnam. It is not intended, and should not be relied upon, as legal advice. Should you wish further information in relation to any legal instrument or matter mentioned in this issue, please do not hesitate to contact one of our offices.Ho Chi Minh City Suite 605 Saigon Tower 29 Le Duan Boulevard District 1 Ho Chi Minh City,Vietnam Tel +84 8 822 1717 Fax +84 8 822 1818 nigel. [email  protected] com. au Hanoi Suite 401 Hanoi Tower 49 Hai Ba Trung Hanoi, Vietnam Tel +84 4 936 0990 Fax +84 4 936 0984 bill. [email  protected] com. au Allens Arthur Robinson – a leading international law firm with lawyers in: Bangkok | Beijing | Brisbane | Hanoi | Ho Chi Minh City | Hong Kong | Jakarta | Melbourne | Perth | Phnom Penh | Port Moresby | Shanghai | Singapore | Sydney 9  © Allens Arthur Robinson – Vietnam Laws The Securities Market in Vietnam The Securities Market in Vietnam – 14 March 2007 This article is an introduction to the legal framework that governs the securities market in Vietnam, in particular public offers, listing, public companies and buying shares. This article focuses on the provision of Law 70-2006QH11 of the National Assembly on Securities (Law 70) and Decree 14-2007-ND-CP of the Government dated 19 January 2007 Providing Detailed Regulations for Implementation of a Number of Articles of the Law on Securities (Decree 14) .The MOF is to shortly issue a regulation to further provide guidance to the SSC on regulating and establishing investment funds, securities companies and fund management companies. An update will be provided once the regulation has been promulgated. 1. 1. 1 Relevant bodies The State Securities Commission (SSC) The SSC is the official regulator of the stock exchange, and is overseen by the Ministry of Finance (MOF). The HCMC Securities Trading Centre (HCMCSTC) The HCMCSTC is an ad ministrative unit of the SSC.It is a securities trading and listing market and offers and official mechanism through which new government bonds are issued and is the secondary markets for several existing bonds. Currently, the HCMCSTC is an administrative unit under the SSC. Under Law 70 it is to covert to either a Stock Exchange or a Securities Trading Centre in the form of a limited liability company or a shareholding company by July 2008. It is expected that the HCMCSTC will be converted into a Stock Exchange. 1. 2 1. 3 The Hanoi Securities Trading Centre (HASTC) The HASTC is an administrative unit of the SSC.It is a securities trading and listing market and offers and is also Vietnam’s official over-the-counter market for securities. Under Law 70 it is to covert to either a Stock Exchange or a Securities Trading Centre in the form of a limited liability company or a shareholding company by July 2008. It is expected that the HASTC will be converted into a Securities Tradin g Centre. 2. Public offer (PO) In Vietnam the processes of a public offer (PO) and listing are different, although companies may do the two simultaneously.A PO is an offer to sell shares, bonds or fund certificates via the mass media, or to at least 100 investors excluding institutional investors or to an unspecified number of investors. 2. 1 Participants (a) The issuer or issuing organization. This is the enterprise making the PO. The securities may be listed or unlisted. Underwriters. Securities in a PO may be distributed by underwriters. Underwriters must be securities companies authorized to underwrite issues of securities or a commercial banks approved by the SSC to underwrite issues of bonds, on conditions regulated by the MOF.The role of the underwriter is to assist the issuer to complete procedures prior to the PO, to purchase the securities for resale or the unsold portion of the securities from the issuer, and to assist the issuer to distribute the securities to the public . Custodian banks. These are commercial banks that are either domestic or foreign invested (that is, not an offshore licensed bank) and are licensed to carry out securities depository activities including the keeping and maintaining of securities.  © Allens Arthur Robinson – Vietnam Laws (b) (c) (d) Investors. Investors who wish to purchase securities may be Vietnamese or foreign investors but foreign investor must first apply for a securities trading code. Foreign investment is also subject to limitations (discussed below). 2. 2 Currency and par value Securities offered by a PO must be denominated in Vietnamese dong. The par value for shares and fund certificates is VND10,000 and the minimum par value for bonds is VND100,000. Conditions for a PO (a) Shares.An issuer of shares must be a shareholding company with paid-up capital of at least VND10 billion at the time of registration of the PO, must have made a profit in the year prior to the PO and must not have accumulated l osses as at the year of registration of the offer. The general meeting of shareholders1 of the issuer must pass an issue plan and plan for utilization of the proceeds earned. 2. 3 Under Decree 14 other specific conditions apply to newly established enterprises conducting an initial public offer if the enterprise is in the infrastructure or high-tech sectors.These conditions include the obligation for there to be an underwriter, and the obligation for there to be a bank supervising utilization of the proceeds earned from the offer. (b) Bonds. An issuer of bonds must have paid-up capital of at least VND10 billion at the time of registration of the PO, must have made a profit in the year prior to the PO, must not have accumulated losses as at the year of registration of the offer and must not have more than 100 overdue debts payable. The board of management or members’ council of the issuer (as applicable) must pass an issue plan and plan for utilization and repayment of the pro ceeds earned.The issuer of bonds must also give an undertaking to investors to discharge it obligations. In the case of convertible bonds the issue plan and plan for utilization proceeds must also have a plan for issuance of the shares for conversion and all plans must be passed by the general meeting of shareholders (not the board of management). (c) Fund Certificates. Issued fund certificates must have total value of at least VND50 billion. There must also be an issue plan and a plan for investment of the capital funds earned. 2. 4Prospectus Issuers of a PO must prepare a prospectus. The main contents for a prospectus are prescribed in Law 70 and the MOF has been delegated the task of creating a sample form prospectus. Among other things, the prospectus must include the financial statements of the issuer for the 2 years prior to the issue of the PO. The prospectus must be signed by the chairman of the board of management, the general director, the financial director/accountant (on ly in the case of shares and bonds) and the legal representative of the underwriter. . 5 Registration The issuer must register the PO with the SSC. To register, the issuer must submit a request for registration and attach those documents that are required by Law 70 (and which will be given more detail in specific regulations of the MOF). The documents required include the prospectus, the charter (or in the case of a PO of fund certificates, the proposed charter of the securities investment fund) and relevant resolutions and undertakings by the issuer. In the case of a PO for fund certificates the 1In the case of a enterprise with foreign owned capital that is converting to a shareholding company in combination with making a public offer of shares, Decree 14 clarifies that the issue plan and plan for utilization is passed by the owner of the enterprise with 100% foreign owned capital and the board of management of a joint venture enterprise. 2  © Allens Arthur Robinson – Vie tnam Laws contract for supervision between the custodian bank and the securities investment fund must also be submitted. The SSC has 30 days from receipt of the registration statement to certify registration. . 6 Announcement Within 7 days from certification of registration the issuer must make a public announcement in 3 consecutive newspaper issues. The announcement must stipulate the time in which investors have to register to purchase the securities. The time limit can be set by the issuer but must be a minimum of 20 days. Registration to purchase and payment of monies When an investor registers to purchase the securities it must pay the purchase price into an escrow bank account and this money will remain in escrow until completion of the PO.Allocation and delivery The issuer must allocate the securities within 90 days from the SSC’s certificate of acceptance, and physically deliver the securities to investors within 30 days from the date the offer ends. 2. 7 2. 8 3. List ing Listing is the process of taking a privately-owned organisation including an equitized or equitizing State owned enterprise (SOE) and making the transition to a publicly-owned entity whose shares can be traded on the HCMCSTC or HASTC. 3. Conditions, application and procedures for listing The regulations on the conditions, application files and procedures for listing a company are not contained in Law 70, they are contained in Decree 14. The conditions for listing on the stock exchange (of which there are currently none in Vietnam) are different from the conditions to list on a securities trading centre. However, in anticipation of the HCMCSTC converting to a stock exchange, new registrations for listing on the HCMCSTC must satisfy the conditions applicable for stock exchange listings, while existing listed companies on the HCMCSTC have two years to satisfy these conditions.Companies failing to meet these requirements will have their listing moved to the HASTC. Conditions, applic ation and procedures for listing on the Stock Exchange/HCMCSTC (a) Shares. The listing company must be a shareholding company with paid-up capital of at least VND80 billion at the time of registration for listing, must have made a profit in the two years prior to year of listing and must not have accumulated losses as at the year of registration for listing.There must not be overdue debts payable (unless a lawful reserve has been made for them) and there must be public disclosure of all debts owed to the company by officers2 and major shareholders. At least 100 shareholders must own 20% of the voting shares of the listing company, and there must be an undertaking from shareholders who are also officers of the company to hold 100% of their shares for 6 months from the date of listing and 50% of their shares for the following 6 months. Bonds.The listing company or SOE must have paid-up capital of at least VND80 billion at the time of registration for listing, must have made a profit i n the two years prior to year of listing and must not have overdue debts of more than 1 year. There must be at least 50 bondholders in any one bond issue. 3. 2 (b) 2 Officers are the members of the board of management, members of the board of controllers, director, general director, deputy director, deputy general director and chief accountant.  © Allens Arthur Robinson – Vietnam Laws (c) Fund Certificates. Issued fund certificates must have total value of at least VND50 billion. There must be an undertaking from the initial shareholdings and members of the committee of representatives of the fund to hold 100% of their shares for 6 months from the date of listing and 50% of their shares for the following 6 months. There must be at least 100 owners of fund certificates. 3. 3 Conditions, application and procedures for listing on the HASTC (a) Shares.The listing company must be a shareholding company with paid-up capital of at least VND10 billion at the time of registration fo r listing, must have made a profit in year prior to year of listing and must not have overdue debts of more than 1 year (with no current debts or financial obligations to the State). There must be at least 100 shareholders with voting shares, and there must be an undertaking from shareholders who are also officers of the company to hold 100% of their shares for 6 months from the date of listing and 50% of their shares for the following 6 months.The conditions relating to profitable business operations and overdue debts do not apply to newly established enterprises in infrastructure and high-tech sectors or equitizing SOEs. (b) Bonds. The listing company or SOE must have paid-up capital of at least VND10 billion at the time of registration for listing, and all bonds in the issue must have the same maturity date. Other types of securities. The task of stipulating conditions for listing other types of securities has been delegated to the MOF. (c) 3. 4 Registration The listing enterpris e must register with the relevant exchange or trading centre.To register the listing enterprise must submit a registration slip and attach those documents that are required by Law 70 (and which will be given more detail in specific regulations of the exchange/trading centre). The documents required include the prospectus, relevant corporate resolutions, register of shareholders/bondholders and required undertakings. The exchange/trading centre has 30 days from receipt of the registration slip to approve or refuse the application. 3. 5 Trading Current guidelines on securities, membership of the HCMCSTC/HASTCand trading in securities are contained in Circular 583 implementing Decree 1444.In time, Circular 58 should also be repealed by a new circular implementing Law 70 and Decree 14. In the interim the HCMCSTC and the HASTC continue to apply the day to day trading rules contained in the Circular 58. In addition, under Law 70, the HCMCSTC and the HASTC each are given the responsibility to issue regulations on the trading of listed securities within their respective centres. 3. 6 Other trading Securities listed on a Stock Exchange cannot be traded outside the Stock Exchange, unless otherwise stipulated in the trading rules of the Stock Exchange.In comparison, securities listed on a securities trading centre (STC) can be traded at a securities company which is a trading member of the STC. 3. 7 Taxation holidays – almost over Previously, to encourage investment in Vietnam’s securities market, various incentives were offered, 3 4 Circular 58-2004-TT-BTC of the Ministry of Finance dated 17 June 2004. Both Circular 58 and Decree 144 were issued before Law 70 and Decree 14, and must be read down to the extent of the inconsistency. 4  © Allens Arthur Robinson – Vietnam Laws ncluding preferential corporate income tax rates to companies upon listing. However, this preferential tax treatment ceased on 1 January 2007. Dividends from shares have been fr ee of personal income tax since 1994. However this very long â€Å"temporary exemption† is expected to come to an end under the proposed Law on Personal Income Tax, which was considered by the National Assembly in October-November 2006 and is expected to be passed in 2007. If passed in its current draft form, dividends from shares will be subject to personal income tax at a proposed rate of 5% from 1 January 2009. . Public companies A public company is a newly introduced concept in Vietnam. A public company is a shareholding company with any of the following characteristics: †¢ †¢ †¢ Shares have been issued via a PO. Shares are listed on the HCMCSTC or the HASTC. Shares are owned by 100 or more investors, excluding professional securities investors, and have a paid-up charter capital of VND10 billion or more. Importantly, a company does not have to be listed to be deemed a public company. New rules introduced for public companies include: 4. Filing A public com pany must lodge the public company file with the SSC within 90 days of becoming a public company. The public company files comprises the company’s charter and business registration certificate, the most recent financial statement and summarized information on its business operations scale, management organization and shareholding structure. Major shareholders A shareholder of a public company is deemed to be a major shareholder when it holds directly or indirectly (undefined) 5% or more of the voting shares the company.Upon becoming a major shareholder, the shareholder must report to the SSC and the HCMCSTC or HASTC (depending on where the shares of the public company are listed/offered). The information that must be reported is not extensive: only details of the investor (name, address) and details of the shares (number, percentage). However, important changes to this information, including a change of the number of shares in excess of 1%, must also be reported. Takeovers An offer to purchaser 25% or more of the voting shares in a public company must be made by a â€Å"public offer to acquire†.The public offer to acquire must be registered with and approved by the SSC (the law does not detail any criteria or basis for the approval) and must be announced in the mass media. Of note, if after implementation of the public offer to acquire, the acquirer holds 80% or more in the public company, the acquirer must, if the remaining shareholders so request, acquire the remaining shares at the announced price of the offer to acquire. 4. 4 Disclosure requirements A public company must publicly disclose certain information and report it to the SSC.Annually, a public company must disclose its audited financial statements. In addition, it must disclose information within a short period (24 hours, or 72 hours) upon the happening of a prescribed event, for example if an account of the public company is frozen (within 24 hours) or if a decision is made to borrow bonds with a value of 30% or more of the company’s equity (within 72 hours). 4. 2 4. 3 5  © Allens Arthur Robinson – Vietnam Laws 5. 5. 1 Foreign investors – how to purchase sharesUnlisted shares To contribute capital or purchase shares in Vietnamese enterprises, foreign investors must open a Vietnamese dong capital contribution and share purchase account (Account) at a commercial bank operating in Vietnam. All transfers of funds for the purpose of contributing capital, purchasing and selling shares, transferring capital contribution, receiving and using dividends or profits distribution, or purchasing foreign currency from authorised banks for remittance abroad and other transactions relating to any activity of capital contribution or purchase of shares inVietnamese enterprises by foreign investors must be performed through this Account. Further, this Account may only be used for capital contributions and share purchase activities. Within 2 working days from the date of opening the Account at a commercial bank, the foreign investor must register the Account with the State Bank (Department of Foreign Exchange Control). Under law, the State Bank must certify registration of the account within 5 working days, or otherwise provide written notice of its reasons for refusing to provide certification.A foreign investor is only allowed to perform receipt or payment transactions through the Account after obtaining a document on certification of account registration from the State Bank. Therefore it is important for potential investors to organize this account well in advance of the relevant share purchase date. Other than the controls over the Account, trading in unlisted shares is largely unregulated. 5. 2 Listed shares The foreign investor must apply for a securities trading code from the HCMCSTC/HASTC.The application consists of an application form and supporting documents. Unfortunately, the supporting documents that originate outside Vietn am (for example the constitution and establishment documents of the foreign investor) are subject to the tedious requirements of notarization and certification. Investors must then open a VND securities trading account with a registered broker in accordance with Decision 15505 to service activities of the purchase and sale of securities.The following accounts must be opened by the broker at an authorized bank in Vietnam: (a) a specialized, on-call foreign currency deposit account, into which foreign currency of the foreign investor is deposited (i) for the purpose of conversion into VND for purchase of securities or (ii) after conversion from VND for the purpose of remittance overseas or other authorized foreign currency remittances in Vietnam; and (b) a specialized, on-call VND deposit account, into which all VND amounts (after conversion from foreign currency) and all VND income from securities nvestment is transferred and from which all VND remittances for purchase of securities or for conversion into foreign currency is made. Listed share certificates must be centrally deposited at the Vietnam Securities Depository (VSD). This happens in two steps: first, the owner deposits the certificates with a depository member (for example, the broker or depository bank) and second, the depository member in turn deposits the certificates at the VSD. Cash settlement is made via the settlement bank, which is the BIDV. 6. 6. 1Foreign investors – restrictions Prohibited and conditional sectors Four prohibited sectors are listed in the 2005 Law on Investment. These sectors apply equally to foreign and local investors. Nine conditional sectors are listed in the 2005 Law on Investment. These sectors also apply equally to foreign and local investors. In addition foreign investment is conditional in 13 sectors specified in Decree 108 and ‘other investment sectors in international treaties of which Vietnam is a member and which restrict the opening of the 5Decision 1550-2004-QD-NHNN of the State Bank of Vietnam dated 6 December 2004. 6  © Allens Arthur Robinson – Vietnam Laws market to foreign investors’. It is not yet clear what the conditions are, and whether they may include restrictions on indirect investment. 6. 2 Other restrictions The current (to the extent that they have not been specifically repealed) laws of Vietnam consist of the following restrictions: (a) (b) (c) There is a cap on total foreign shareholdings in or capital contributions to any one unlisted domestic business of 30% of the charter capital (30% rule).The range of unlisted companies in which foreign investors may purchase shares is also restricted by sector (only 35 business lines are permitted). Foreign investors may hold a maximum of 49% of the total shares of any one company listed at a stock exchange or registered for trading at a securities trading centre (49% rule). Although not yet specifically repealed these restrictions may be affected by the 2005 Law on Investment which stipulates â€Å"investors must be permitted to invest in all sectors and in all industries and trades which are not prohibited by law†.Therefore under this general rule foreign investors should be (in theory) permitted to invest in all sectors and all industries provided that they are not in a prohibited or conditional sector (as above). It is not clear if the authorities will interpret the 30% rule and the 49% rule as being repealed by or alternatively, qualifying the Law on Investment. We consider that the better view is that these rules should be repealed by the Law on Investment. This view is consistent with the WTO principle of national treatment.However, we understand that in a meeting held on 18 January 2007 between the Government Office, the Ministry of Finance and the SSC the Government Office expressed the Prime Minister’s opinion that the 49% rule would continue to be applied ‘temporarily’. In any event, specific re strictions will continue to apply to conditional sectors (for example, banks) in accordance with commitments made under international agreements. 7. 7. 1 Securities Industry Players General Securities companies and fund management companies are the key players in the Vietnamese securities industry.This section provides an overview of the scope of activities under Law 70 of these companies Securities company As at 29 December 2006, the SSC has issued 55 operational licenses to securities companies under the previous securities law regime. After the effective date of Law 70, being 1 January 2007, there have not been any operational licenses issued and the most likely reason is that the implementing regulations for Law 70 have not been promulgated to guide the SSC in its work.Under Law 70, securities companies are permitted to engage in any or all of the following activities (the minimum legal capital is listed along side each of the activity): (a) (b) securities brokerage (VND 25 bill ion); securities self-trading (if the securities company engages in this activity it can only conduct the other activity of underwriting) (VND 100 billion); underwriting issues of securities (VND 165 billion); securities investment consultancy (VND 10 billion); financial consultancy services; and other financial services. . 2 (c) (d) (e) (f) The permitted areas of activity are limited compared to the business areas permitted under the old securities law regime. The prescribed minimum legal capital has also increased. This explains why there was a rush towards the end of 2006 to obtain a securities company license from the SSC. 7  © Allens Arthur Robinson – Vietnam Laws 7. 3 Fund Management Company Prior to the effective date of Law 70, eighteen operational licenses were issued by the SSC to fund management companies.Again there was a rush to obtain a license towards the end of 2006 because the scope of business activities has been restricted under Law 70. A fund management company can only engage in fund management and portfolio management and the minimum legal capital for establishment is VND 25 billion. 8. Funds This section provides a brief overview of investment funds as this is the subject of a detailed paper which will be released once the MOF has settled the regulation on investments funds and other related matters. Investment funds have been driving the bullish Vietnamese stock market.There have been a growing number of offshore and onshore investment funds established in recent years. At least 25 investment funds are operating in the market with an objective of investing in Vietnam. The Prime Minister has reportedly indicated that regulations on capital controls would be tightened to prevent capital flight which probably means that the MOF’s soon to be released regulations would introduce further regulatory controls on the operation of Funds. In brief, Law 70 sets the framework for the establishment of onshore public and membersâ€℠¢ funds.Public funds and members’ funds must have at least VND 50 billion in start up capital and managed by a fund management company. A public fund may be an open or closed ended fund with at least 100 investors. A members’ fund must have up to 30 investors. Assets of a fund are to be held by a custodian bank. The MOF’s future regulation is expected to contain other operational requirements. This article was written by Julia Howes, a lawyer with Allens Arthur Robinson who has been practicing in Vietnam for 3 years.Allens Arthur Robinson is one of the largest international law firms in Asia, with more than 900 lawyers, including 179 partners. Allens Arthur Robinson has been providing legal services for clients in Australia for more than 180 years and in Asia for the past 30 years. Our Vietnam practice is managed by partners Bill Magennis in Hanoi and Nigel Russell in Ho Chi Minh City, both of whom joined the Allens Arthur Robinson partnership from 1 January 200 7. The Vietnam practice was established in 1993 and is one of the largest and most successful among foreign law firms in the country.For further information, please contact: Bill Magennis Partner, Hanoi Ph: +84 4 936 0990 Bill. [email  protected] com. au Nigel Russell Partner, Ho Chi Minh City Ph: +84 8 822 1717 Nigel. [email  protected] com. au Steve Pemberton Partner, Singapore Ph: +65 6535 6622 Steve. [email  protected] com. au Jim Dunstan Executive Partner – Banking & Finance and Asia offices, Sydney Ph: +61 2 9230 4571 Jim. [email  protected] com. au Simon Lynch Partner, Melbourne Ph: +61 3 9613 8922 Simon. [email  protected] com. au Jeremy Low Partner, Sydney Ph: +61 2 9230 4041 Jeremy. [email  protected] com. au This publication is copyright.Except as permitted under relevant laws, no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner.  © Allens Arthur Robinson 8  © Allens Arthur Robinson – Vietnam Laws The material contained in Vietnam Client Updates is intended to inform you of recent legal developments in Vietnam. It is not intended, and should not be relied upon, as legal advice. Should you wish further information in relation to any legal instrument or matter mentioned in this issue, please do not hesitate to contact one of our offices.Ho Chi Minh City Suite 605 Saigon Tower 29 Le Duan Boulevard District 1 Ho Chi Minh City,Vietnam Tel +84 8 822 1717 Fax +84 8 822 1818 nigel. [email  protected] com. au Hanoi Suite 401 Hanoi Tower 49 Hai Ba Trung Hanoi, Vietnam Tel +84 4 936 0990 Fax +84 4 936 0984 bill. [email  protected] com. au Allens Arthur Robinson – a leading international law firm with lawyers in: Bangkok | Beijing | Brisbane | Hanoi | Ho Chi Minh City | Hong Kong | Jakarta | Melbourne | Perth | Phnom Penh | Port Moresby | Shanghai | Singapore | Sydney 9  © Allens Arthur Robinson – Vietnam Laws

Platos Digression of Regimes and The Order of the Soul

Platos Digression of Regimes and The Order of the Soul Free Online Research Papers Book VIII of the Republic of Plato is very clear in its intent. Socrates had just finished describing his ideal state in the previous book, the Aristocratic Republic. However to truly decide whether this is the best political regime in terms of the happiness of its citizens, other regimes must be analyzed in comparison. There are four regimes which, in a sense, digress from the highest regarded Aristocracy. Each of which has a subsequent individual whose dominant characteristic, or order of the soul is in direct relation to that regime. However Socrates’ will also show that it is the individual who dictates the regime, and inevitable digression into the system below it. In this essay I will assess Book VIII and show how the principal virtue of each regime (and of the individual therein) eventually becomes its principal vice and digression. The dialogue in this book takes place mostly between Socrates and Glaucon. The objective is to consider carefully if the best political system, the Aristocracy, produces the happiest individual. â€Å"There are four forms it is worthwhile to have an account of, and whose mistakes are worth seeing; and similarly with the men who are like these regimes; so that, when we have seen them all and agreed which man is the best and which worst, we could consider whether the best man is happiest and the worst most wretched, or whether it is otherwise.† (544a, b.)1. The four regimes post or sub-Aristocracy, in order of digression from the one with highest inherent good to least, is as follows: Timocracy, Oligarchy, Democracy, and Tyranny. Each one comes attached with a human in which their character reflects in the regime. Aristocracy’s are ruled by Philosopher kings and are, as such based on reason and wisdom, its people, lovers of justice. The Timocracy differs from the Aristocracy in that it is far more militant, its people, lovers of honour. The Oligarchy places precedence in financial and material acquisition, its people, lovers of money. The Democracy is rooted in freedom of the individual, its people enjoy it through the assorted (and what Socrates will argue, unnecessary) desires it fosters. Last, and in this case least (in terms of ‘good’), is Tyranny. This regime is emphasized by lawlessness, and the skewed sense of morals due to the corruption of power. We start with the transitional period of the decay from Aristocracy to Timocracy, what Socrates considers to be the best and least corrupt of the lesser regimes. Because the Aristocracy is the system held in highest regard, he believes that it is also the most difficult change. The only way it will digress into a Timocracy is when people start having children when they shouldn’t. The result of this overpopulation is a society harder to control, and an eventual mixing of the class systems or metals Socrates explains in the prior books. â€Å"Although they are wise, the men you educated as leaders of the city will nontheless fail to hit on the prosperous birth and barrenness of your kind with calculation aided by sensation, but it will pass them by, and they will at some time beget children when they should not.† (546b.)2. This blending of the social structure will then lead to people assuming positions of power, which, in the former system would not be qualified, essentially meaning they are not Philosopher Kings. I don’t believe the reader is meant to take this literally, and when reading this part of the book, Socrates’ excuse for the decline of his Utopia (due to over population) seems almost satirical. I believe it is meant to be taken more as a metaphor for the unpredictability of nature. These less philosophically inclined rulers will tend to lean towards war as opposed to peace when in power. The individual, following suit with the regime he lives in will love gymnastics, hunting, and although he would despise money when he’s young, as he aged he would grow to love it more, as he no longer devotes himself to excellence. This will happen as the best guardian, the power of reasoned, educated speech, leaves him. â€Å"a lover of hearing, although he’s by no means skilled in rhetoric.† (549a.)3. It is this point which I believe differentiates him most from the Guardian class he came from, his inability for abstract, philosophic thought and argument. It is here when a pattern arises in the transition from regime to regime. It is the children, unsatisfied with the lives of their parents, which would be the lives otherwise set out for themselves; should they not actively choose to live differently, that have the greatest impact. This rebellion is the spark of the fire which eventually burns the structures of any political regime in question. The boy of a Timocratic man would see everything his father has. A life devoted to honour is rich in virtue, however the son would only see what that lifestyle lacks. In this case possessions. â€Å"humbled by poverty he turns greedily to money-making; and bit by bit, saving, and working, he collects money. Don’t you suppose that such a man now puts the desiring and money-loving part on the throne, and makes it the great king within himself†(553c.) 4. The more this perpetuates the more we see the societal balance tipping from virtue, in favour of wealth. â€Å"Well then, I said, from the progress in money making and the more honorable they consider it, the less honorable they consider virtue. Or isn’t virtue in tension with wealth, as though each were lying on a scale of balance, always inclining in opposite directions?† (550e.) 5. â€Å"Instead of men who love victory and honor, they finally become lovers of money-making and money; and they praise and admire the wealthy man and bring him to the ruling offices, while they dishonor the poor man.† (551a.) 6. Once this transition is complete and it is the wealthiest men in the society who rule. The Timocracy has successfully degenerated into an Oligarchy. The Oligarchic state, and in turn Oligarchic man are fundamentally (according to Socrates) more flawed than the Timocracy and Timocrat respectively. Since the people in an Oligarchy respect wealth above all, the richest men will ascend to power, not the most qualified. â€Å"But what is the character of the regime? And what are the mistakes which we were saying it contains? First, I said, the very thing that defines a regime is one. Reflect: if a man were to choose pilots of ships in that way – on the basis of property assessments – and wouldn’t entrust one to a poor man, even if he were more skilled pilot-they would make poor sailing† (551c.) 7. The second major problem with the Oligarchy is that it will create a great class distinction between the rich and the poor. Once again the very thing that defines the regime and the people in it is inevitably its downfall. The gap in material possessions between classes leads to poorer class to revolt. â€Å"The poor are now in no wise despised by the rich. Rather it is often the case that a lean, tanned poor man is ranged in battle next to a rich man, reared in the shade, surrounded by a great deal of alien flesh, and sees him panting and full of perplexity. Don’t you suppose he believes that it is due to the vice of the poor that such men are rich, and when the poor meet in private, one passes the word to the other: ‘Those men are ours. For they are nothing† (556d, e.) 8. A Democracy would then come into being when the poor revolt and share office with the rich who are left. And also again the children come into play here. Their fathers, obsessed with making money, would also be reluctant to spend it since they love it so much. â€Å"I suppose a son would be born to that stingy, Oligarchic man, a son reared by his father, in his dispositions. ‘Of course’. Now, this son too, forcibly ruling all the pleasures in himself that are spendthrifty and do not conduce to money-making, those ones that are called unnecessary.† (558b, d) 9. What Socrates means here, is the children of the Oligarchs would eventually inherit their father’s wealth. And because they did not have to work for it, would be much more partial to spend it. This unnecessary spending would in turn lead to unnecessary desires. And in turn a Democracy is born. Democracies, which some might find rather low on the list, is not surprisingly for anyone who has read the Republic thoroughly up to this point. In describing Socrates’ ideal state you soon find that he does not believe all men are created equal. Everyone in his society is important, specific to where they fall under his class system, but to assume an Auxiliary is equal to a Guardian would defeat the purpose of class systems and the Noble Lie. In a Democracy all men are equal and free to indulge in whatever desires they please. Because the democratic individual is so inclined to such (what Socrates would say are trivial, or even dangerous) desires. The reason in his soul is severely lacking, hence why Democracy is only succeeded by Tyranny. Although it may appear that the Democratic man would be very happy, it seems as though his happiness is superficial and clouded by his ignorance and Socrates would never be quoted as saying ‘ignorance is bliss’. â€Å"The ultimate in freedom of the multitude, my friend, I said, occurs in such a city when the purchased slaves, male and female, are no less free than those who have bought them.† (563b) 10. What Socrates is saying here is that eventually the idea of freedom will become so extreme that everyone will be equal, including slaves and their masters. And because of this the rulers of the regime would be questioned as to why they are held in higher regard than the citizens. This questioning of power would lead to the masses claiming the rulers were in fact Oligarchs, and un-democratic. Socrates believes that when you have something so extreme in one direction (in this case freedom) it will inevitably swing in another direction, causing an extreme of the exact opposite. â€Å"And, really anything that is done to excess is likely to provoke a correspondingly great change in the opposite direction-in seasons, plants, bodies, and, in particular, not least in regimes. Too much freedom seems to change into nothing but too much slavery, both for private man and city.† (563e – 564a) 11. As the majority questions the democratic rule, and the ‘oligarchic’ leaders, one person will take charge in the revolt. This man will easily ascend quickly to be a leader of the masses, who have become soft, caring only for their desires. â€Å"Aren’t the people always accustomed to set of one man as their special leader and to foster him and make him grow great? Yes they are accustomed to do that. It’s plain therefore , I said, that when a tyrant grows naturally, he sprouts from a root of leadership and from nowhere else.† (565c, d) 12. And this is how a Tyranny is born out of a decaying democracy. Just as every regime prior, the very â€Å"virtue† the system is based on is the primary reason for its digression. A Tyranny, the worst regime according to Socrates, has the least inherent good, and thus, least happiness for its people. The tyrant will abuse his position and constantly wage wars against other states so that he has a reason and unquestioned purpose to lead, and tax the public. Its people become slaves only because they let themselves, allowing and even enforcing the Tyrant into power. The unlimited freedom of the democracy has made this transition easy and inevitable. So what can be learned by book 8? Socrates stresses the power of the individual and how he is ultimately responsible for the society and regime he lives in. Once more the individual’s soul is reflected in the regime, and vice versa. The Aristocracy, and those who live in it, has the perfect balance of the soul, with reason, logic and intelligence paramount. Next, the Timocracy, is praised for its honour based society and individuals who hold honour above all else, however it lacks the integral philosophic leadership of its preceding system, and thus falls short in terms of ideal, and the best possible happiness for its people. Following Timocracy, comes the Oligarchy. It is this transition I see as the start of real decay, both in the sense of the regime and in the individual. While honour can be praised, Love of something tangible, like money, seems to blind the regime and individual alike. If it were not for his greed and obsession with status, he would be a rogue within the state. After which comes democracy which although at first might seem like a virtuous society, holding the freedoms of individuals above all else, self implodes. The individual becomes so lost in his desires; he is unaware and uncaring of what is happening around him. He does not care for intelligence and reason and has a soul filled with excess. His ignorance makes it easy for his regime to be transformed and taken over by a Tyrant, the worst of all, whose power hungry lust will create a slave like society unable to do anything. The Tyrant’s soul is as broken as the regime he looks over. Aristocracy > Timocracy > Oligarchy > Democracy > Tyranny are intrinsically linked to Reason > Honour > Money > Freedom > Power. By finding which characteristic of the soul is most dominant in that individual, you can label the regime as such. 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