Limitations of government company
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Limitations of Government Company:
Following are the limitations of Government Company:
(i) Board of Directors Packed with ‘Yes-Men’:
On the Board of Directors of a government company, there are Government appointed directors (Government being the major shareholder); who are ‘yes-men’ of the Government. They are unable to run the company, in a businesslike manner.
(ii) Autonomy Only in Name:
Independent character of a Government company exists only in name. In reality, politicians, ministers, Government officials, interfere excessively in the day-to-day working of the government company.
(iii) A Fraud on Companies Act and Constitutions:
A Government company is criticized as being a ‘fraud on the Companies Act and on the Constitution. This criticism is valid on the ground that the Government can exempt a Government company from application of several provisions of the Companies Act. Again, the Parliament is not taken into confidence, while creating a Government company.
(iv) Fear of Exposure:
The annual report of the government company is placed before the Parliament/State Legislature. The working of the company is exposed to Press criticism: Therefore, management of the Government Company often gets demoralized and may not take initiative to come out with and implement something innovative.
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Following are the limitations of Government Company:
(i) Board of Directors Packed with ‘Yes-Men’:
On the Board of Directors of a government company, there are Government appointed directors (Government being the major shareholder); who are ‘yes-men’ of the Government. They are unable to run the company, in a businesslike manner.
(ii) Autonomy Only in Name:
Independent character of a Government company exists only in name. In reality, politicians, ministers, Government officials, interfere excessively in the day-to-day working of the government company.
(iii) A Fraud on Companies Act and Constitutions:
A Government company is criticized as being a ‘fraud on the Companies Act and on the Constitution. This criticism is valid on the ground that the Government can exempt a Government company from application of several provisions of the Companies Act. Again, the Parliament is not taken into confidence, while creating a Government company.
(iv) Fear of Exposure:
The annual report of the government company is placed before the Parliament/State Legislature. The working of the company is exposed to Press criticism: Therefore, management of the Government Company often gets demoralized and may not take initiative to come out with and implement something innovative.
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Limitations of government company
Explanation:
- A government company consists of an organization with 51% of the shared capital held by the state or the central government and plays a vital role in the managing the GDP of the nation.
- Some examples includes the India Limited, the Bharat Heavy Electricals Limited, and the Coal India Limited, etc
- Some of the features include the separate legal entity, incorporated under an act, and is recorded by the agency appointed by the central government.
- Limitations of the company are that it faces a lots of the governmental interference of the government officials, and ministers, and the politicians.
- As they are financed by the government, hence the companies evade all constitutional duties of not answering to the parliament.
- The operations of the company can be hampered, as the board of the company comprises mainly of politicians that give more emphasis to their political party and less focus on the growth and development of the company.
- Delays in decision making and lack of autonomy etc.
Learn more about the limitations of government company.
- brainly.in/question/1344177 answered by Shubhangi4.
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