Question

2. The government is thinking about setting up a new business organisation under
the Indian Companies Act, 1956. It is being decided that the business will compete
with the private companies in true spirit and that the government will exercise
control over the paid up share capital of the business.

a. Identify which form of public organisation is the government thinking to start?

b. State any two merits and demerits each of the business form identified in part a. ( this is a business study case)​

Answer 1

Answer:

Mark me as brilliant

Explanation:

MEANING OF GOVERNMENT COMPANY - DEFINITION

A Government company is a company in which more than 50% of the paid-up capital is held by the Central Government, State Government, or jointly by the Central and the State Governments.

It is formed and registered under the Companies Act 20113.

FEATURES OF A GOVERNMENT COMPANY - DEFINITION

Any company will become a government company when the government owns at least 51% of the company's shares.

Any management in the company is governed by the companies act.

The employment takes place based on the Memorandum and Articles of Association of the company.

The company gets its funds from shareholders (government and private).

Such a company is also allowed to raise funds for various purposes.

MERITS OF GOVERNMENT COMPANY - DEFINITION

A government company is flexible in taking management decision depending on the opportunities.

These companies are able to control the market and reduce unhealthy business practices.

LIMITATIONS OF GOVERNMENT COMPANY - DEFINITION

A limitation is that the companies act is valid because the company is owned by the government.

Such companies are not answerable to the parliament and could lead to under the table business practices.

GOVERNMENT COMPANY - DEFINITION

A Government company is established under the Indian Companies Act, 1956 and is registered and governed by the provisions of the Indian Companies Act.

These are established for purely business purposes and in true spirit compete with companies in the private sector