Private Vs Government Companies

Benefits of Private Vs Government companies

1. G OVERNMENT C OMPANIES

2.   M EANING A government company is a company in which not less than 51 percent of the paid up share capital is held by the central government or state government or jointly by both. Examples: Hindustan Insecticides Ltd., Steel authority of India Ltd.

3. F EATURES It is created under the Companies Act 2013 or any previous Company Law It can sue and be sued in the court of Law It can enter into a contract and can acquire property in it's own name Management is regulated by the provision of Companies Act

4. Employees are recruited and appointed as per the rules and the regulations. It is exempted from the accounting, audit rules and procedures. The government companies obtains it from the funds from government shareholdings and other private shareholdings. F EATURES….

5. It can be easily formed as per the provisions of Companies Act. No separate Act is required It has a separate legal entity It enjoys autonomy in management decisions and take actions according to business prudence It is able to control the market by providing goods and services at reasonable prices and curb unhealthy business practices M ERITS

6. In reality the provisions of the Companies Act does not have much relevance as in some government companies, Government is the only shareholder It evades constitutional responsibility which a company financed by the government should have as it is not directly answerable to parliament. L IMITATIONS

7. The government being the sole shareholder, the management and administration rests in the hands of the government. The main purpose of government company, registered like other companies, is defeated. L IMITATIONS….

8. T HANK Y OU