Public Sector, Private Sector and Global Enterprises — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMPublic Sector, Private Sector and Global Enterprises3 Marks
Question
Define government company and write note on its features.
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Answer
Introduction :
Industrial units established in public sector are formed under provision of Companies Act and to make them competent to compete. with private companies, the concept of public companies came into existence.
Government companies are established under companies Act.
Exports are appointed in its Board of Directors.
These Companies are managed better by government companies.
Meaning of Government Company :
The government company means "a company which has $51\%$ or more share-capital with the central government, or state government or one or more state governments or the central government and more than one state government".
In these companies government is major shareholder.
So there is a control of government over these companies.
Characteristic of Government Company : They are as under :
Establishment under Companies Act :
Government companies are established under Indian Companies Act.
Government's Capitals :
In government companies government's capital is minimum 51%.
Separate Identity :
Company is established according to Companies Act. It obtains separate entity.
Like other living person it can purchase assets under its name it can make contract with other persons, it can hold bank account, it can file suit against other person in the court.
Other persons if required can file a suit against the company in the court.
Administration :
The administration of Government company is done according to the provision of Companies Act.
Appointment of the members of Board of Directors :
Government appoints all the members of the Board of Directors.
Appointment of Employees :
The employees are appointed as per norms sets by government.
Managing Capital :
Minimum $51\%$ of capital is of government.
If required, capital is managed by borrowing money or from the shares allotted to private investors.
Government's Shareholder :
In government company shares are under the name on the governor of the president.
Policy making decision :
In government company policy decisions are taken by the concerned minister.
Appointment of an auditor :
Companies Act provisions are not applicable to the accounts and audit of government company.
Auditor is appointed by government. Audited accounts and annual reports are presented in state assembly and parliament.
Conclusion :
In government companies government's capital is $51\%$ or more. so huge public enterprise can get huge financial backing.
Foreign companies too are willing to collaborate with government companies.
The performance of the company is discussed in parliament and state assembly. It is the contribution of its members of the Board of Directors and the ministers of the department
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