28. 'A government company can be formed easily and it is relatively free
from bureaucratic control and political interference. Elaborate the state-
ment in the context of utilities of government companies. What values are
served by the government company?
Answers
Meaning of Government Company:
A Government company is one in which not less than 51% of the paid-up share capital is held by the Central Government or a State Government or jointly by both.
A Government company may either by wholly owned by the Government, in which case 100% capital is provided by Government; or may be owned by the Government (holding minimum of 51% share-capital) and private concerns/individuals (holding maximum of 49% share capital).
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In the latter case, a government company is known as a mixed ownership company. Hindustan Machine Tools, State Trading Corporation, Hindustan Steel Ltd., Hindustan Aeronautics etc. are some examples of Government companies.
Features of a Government Company:
Following are the salient features of a 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.
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(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.
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(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.
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(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.