Compare the company form of organisation with the statutory corporation. Which of the two would you recommend for managing public enterprises and why?
Answers
Answer:
Statutory Corporation
Formation: Such a corporation is formed by a special act of legislature.
Management: It is managed by the Board of directors constituted by the government.
Capital: Capital is fully subscribed by the government.
Scope for private Participation: There is no scope for private participation.
Flexibility: It is subject to some restrictions by the government.
Operational Autonomy: A corporation works as a autonomous body within the provisions of the Act.
Public Accountability: It is accountable to the public through legislature.
Government Company/Company form of organization
Formation: Company is formed by ministry under the Companies Act, 1956.
Management: It is managed by the Board of Directors consisting of members nominated by the government and elected shareholders.
Capital: Minimum of 51% of capital is paid by government.
Scope for private Participation: There is a scope for private participation in its share capital and its affairs.
Flexibility: It enjoys more freedom from government control.
Operational Autonomy: Government company runs on commercial principles like a private enterprise.
Public Accountability: Government and concerned ministry are accountable to the public.