What are the Main Features of the Government Company?
List of Government Companies Important Features.
Created under Indian Companies Act.
A corporate body that is created under the Indian Companies Act 1956 is said to be a government company. Such a company is governed by provisions of Companies Act with regard to registration, audit, accounts, articles, meetings etc.
It is a corporate body.
It is an artificial person created by law and is a legal entity. In its own name, it can enter into contracts and acquire property.
Scope for private participation in the capital.
As the company is partly or wholly managed by government, its share is not less than 51%. There is a scope for private sector to participate in the capital if company is partly owned by the government.
Managed by a Board of Directors.
Board of Directors are appointed by the government and they manage and operate such companies. While forming the Board, the government may consider various interests say labour, consumers, technocrats etc.
Enjoys financial independence.
The revenue obtained from selling goods and services of the company can be used and reused by the government companies. If required, such companies can even borrow money from general public and financial institutions.
Employees are appointed by the company on its own terms and conditions and they are not treated as civil servants.
It is the duty of such companies to present the annual reports and accounts and audit reports to the legislature, as per the Companies Act.
Independent accounting and auditing system.
It is not subject to audit budget and accounting procedures of the government. Freedom from government control is much more in such companies.