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Chapter: 11th Commerce : Government Organisation

Meaning and Features of Government Company

A Government company is formed through registration under the Companies Act, 1956; and is subject to the provisions of this Act, like any other company.

Meaning and Features of Government Company

 

A “Government company” is defined under Section 2(45) of the Companies Act, 2013 as “any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company”.

 

Features of Government Company

 

i. Registration Under the Companies Act

A Government company is formed through registration under the Companies Act, 1956; and is subject to the provisions of this Act, like any other company. However, the Central Government may direct that any of the provisions of the Companies Act shall not apply to a Government company or shall apply with certain modifications.

ii. Executive Decision of Government

A Government company is created by an executive decision of the Government, without seeking the approval of the Parliament or the State Legislature.

iii. Separate Legal Entity

A Government company is a legal entity separate from the Government. It can acquire property; can make contracts and can file suits, in its own name.

iv. Whole or Majority Capital Provided by Government

The whole or majority (at least 51%) of  the  capital  of  a  Government  company   is provided by the Government; but the revenues of the company are not deposited into the treasury.

v. Majority of Government Directors

Being in possession of a majority of share capital, the Government has authority to appoint majority of directors, on the Board of Directors of a government company.

vi. Own Staff

A Government company has its own staff; except Government officials who are sent to it on deputation. Its employees are not governed by civil service rules.

vii. Free from Procedural Controls

A Government company is free from budgetary, accounting and audit controls, applicable to Government undertakings.

viii. Accountability to the Parliament/ State Legislature

The Annual Report of a Government company is placed before the Parliament or the State Legislature.


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11th Commerce : Government Organisation : Meaning and Features of Government Company |


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