7 Features of Government Company

Meaning of Government Company

Government Company is a company whose major shareholding is held by the government. In these companies, 51% or more of the share capital of the company is held by the government.

The government can be central or state government or can be partly owned by both of them. These companies are either under fully owned by the government or partly owned. If the government holds 100% share in these companies then they are totally under government control. In partly owned more than 51% of shares are held by the government & rest is owned by private individuals.

These companies are established under companies act. These companies have a very effective role in the economy of the country. They are useful in managing the GDP & index of the country. Examples of these companies are State trading corporation of India, Steel Authority of India etc. 

Features of Government Company are as follows:

Features of Government Company

Features of Government Company
Features of Government Company

Formed under companies act

Government companies are established under companies act by the government. They need to follow the provisions of the Indian companies act. 1956 & 2013 like other companies do.

These companies have separate legal status from their owners. It can buy, own or sell property in his own name. These companies basically exist to provide service & earn huge profits.

Management & control

Government companies are managed by the government through a board of directors appointed by them. The majority of directors on the board are appointed by the government.

Government while appointing people in board keep various things in consideration like consumer, technocrats, labour etc.

Capital

In government companies at least 51 % of its share capital is provided by the government. The government may also own 100 % of the company’s capital when it is fully owned by it.

In case of partly owned the remaining portion of capital is provided by a private individual. Liability of government is limited to its share in the company.

Own staff

All employees of the government company are hired by itself. The employees are hired by the company on its own term & conditions. They are not treated as civil servants.

There are only some government which are not hired by it. These officials are sent on deputation to the company. All employees are paid remuneration as per company’s rules.

Corporate body

These companies enjoy separate legal status from their owners. It is an artificial person created through law. All businesses are conducted by these companies in their own name. It can enter into contracts & buy, own & sell properties in its own name.

Flexibility

Government companies enjoy greater flexibility in their operations. It has its own rules & regulations to follow in its internal operations. There is greater autonomy & independency in these companies regarding their operations. However, they are required to follow the provisions of the companies act. like other companies.

Accountable to public

Government companies are accountable to public. They need to present its books of accounts to the public through parliament or state legislature. Government company’s books of accounts are audited by its representative & its auditor general. After auditing its performance is presented to the public.


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