Government Company

A Government company is established under the Indian Companies Act and is registered and governed by the provisions of the Indian Companies Act. The basic purpose behind the establishment of a Government Company is to run an industrial or commercial undertaking. Government is the major shareholder of a Government Company and hence exercises major control over its management. One can form a Government Company as a Private Limited Company or a Public Limited Company. 

According to Section 2(45) of the Indian Companies Act 2013, any company in which not less than fifty-one percent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of a Government company is called Government Company.

All the provisions mentioned in the Companies Act are applicable to Government companies unless something else is specified. Also, some of the provisions of the Act are applicable to the retirement or appointment of directors and other managerial personnel of the company. Some examples of Government Company are BHEL (Bharat Heavy Electricals Ltd.), ONGC (Oil and Natural Gas Corporation), Indian Oil Corporation Limited, State Bank of India, etc. 

After Independence, for the development of the country, it became necessary for the Government to start public sector enterprises. Besides, India adopted a Mixed Economy pattern, under which both the public and private sectors played some role in the economic development. Some kind of organizational framework is needed for the Government’s participation in the business and economic sectors of the country to function. In the Public Sector, Government plays a major role in organizing and formulating the key points related to an organization. These public enterprises are owned by the public and accountable to the public through the parliament. A public enterprise may take any particular form of organization depending upon the nature of its operation and its relationship with the Government. 

The forms of public sector enterprises are Departmental Undertaking, Statutory Corporation, and Government Company.