Features of government company

Answer 1

(1) Formation: Government company is formed & registered under Indian Companies Act, 1956, either as a Private company or Public company.

(2) Ownership: It may be partly or wholly owned by Government. State Government or Central Government or both may own the Government Company. If it is partly owned by Government then at least 51% of the capital must be taken over by the government.

(3) Management: Management of Government company is vested in the hands of Board of Directors. The Directors may be nominated by government or even the shareholders can appoint the Board of Directors.

(4) Separate Legal Status: A Government company, like a joint stock company is an incorporated association & artificial person having a common seal & perpetual succession. It has a separate legal entity from its owners.

(5) Body Corporate: A Government company is incorporated under the Indian Companies Act, 1956. It enjoys the status of body corporate. "It can enter into contract in its own name & can acquire properties in its own name. It can sue & can sued by others

(6) Employees: The employees & other staff members in government company are appointed by the company itself. The employees are neither government servants nor they work under civil servants; the government may in exceptional cases nominate some top executives.

(7) Capital Collection: A government company requires huge capital for its business operations. The company is free to collect capital through its own sources & it can even borrow the money depending upon its requirements.

(8) Approval of Accounts: Government company has to place its Annual Accounts & Annual Reports for the approval of Legislature Assembly or Parliament as it is compulsory as per the act.

(9) Flexibility: A government company enjoys full flexibility in its operations. It is free to adopt different changing policies according to changing business environment.

(10) Exemptions: A government company is exempted from Budgetary Accounting & Audit. But, its Auditors are appointed by the government as per the guidance of controller & Auditor General of India.