Question

Compare the company form of organisation with the statutory corporation. Which
of the two would you recommend for managing public enterprises and why?

Answer 1

Answer:

Statutory verses private company

Explanation:

A company has its own individual personality.There are different types of companies.Here we are comparing the private company form with the statutory company form in the following form

1. Minimum Paid-up Capital- A company to be incorporated as a Private Company must have a minimum paid-up capital of Rs. 1, 00,000, whereas a Public Company must have a minimum paid-up capital of Rs. 5, 00,000.

2. Minimum Number of Members- Minimum number of members required to form a private company is 2, whereas a Public Company requires at least 7 members.

3. Maximum Number of Members- Maximum number of members in a Private Company is restricted to 50, there is no restriction of maximum number of members in a Public Company.

4. Transferability of Shares- There is complete restriction on the trans­ferability of the shares of a Private Company through its Articles of Association, whereas there is no restriction on the transferability of the shares of a Public Company.

In general,people basically prefer a Statutory form of a company.

The advantages of statutory corporations are as follows:-

(1)Formation: Formation of Statutory Corporations is easy. It can be easily formed by passing Special Act, either at Legislature Assembly or at Parliament.

(2) Autonomy: Statutory corporations can have its own working pattern. There is no political interference in day to day working of corporation.

(3) Flexibility: Statutory corporations enjoy full flexibility in its operations. It is free to take any decision relating to capital collection. Investment, market, production, recruitment, planning, accounting & the decision once taken can be easily changed.

(4)Capital Raising: Government contributes the capital at large for statutory corporations, but statutory corporations are free to collect capital from general public.

(5) Quick Decisions: Quick decisions are possible because all policy decisions are taken by the Board & board can implement these decisions easily. There is no interference of government in any type of decisions.

(6) Staff Members: Statutory corporations is free to have its own recruitment policy. It can recruit, promote, and transfer any employee / officer as per its requirement.