Meaning and features of a public corporation

Meaning and features of a public corporation

A public corporation is a legal entity established by a law passed by Parliament or the Legislature. Its name is published in the central or state government’s official gazette. It is a fictitious person with the flexibility of the private sector and the authority of the state. They are formed with the intention of engaging in a certain commercial activity. Public corporations have well-defined powers and functions, and they are financially self-sufficient. Nationalized industries or undertakings are administered by these bodies. Many government-run service groups are organised as businesses.

A public corporation is a separate legal body with a common seal and eternal succession. It exists, despite the fact that it is not recognised by the government. It has the ability to own properly; it may enter into contracts and initiate lawsuits in its own name. A public corporation is a type of public enterprise that is established as a self-contained entity by a special Act of Parliament or the State Legislature.

The statute establishes the public corporation’s goals, powers, and functions. In India, public corporations include the Life Insurance Corporation of India, Indian Airlines, Air India International, the Oil and Natural Gas Commission, and others.

The following are some of the most important characteristics of a public corporation

  • Special Legislation: A special Act of Parliament or the State Legislature establishes a public corporation. The Act establishes the ministry’s authorities, aims, functions, and relationships with the Parliament (or State Legislature).
  • Legal Entity in Its Own Right: A public corporation is a separate legal body with a common seal and eternal succession. It exists, despite the fact that it is not recognised by the government. It has the ability to own properly; it may enter into contracts and initiate lawsuits in its own name. These public enterprises have their own legal entity with a common seal and perpetual succession. In the viewpoint of the law, it is viewed as an artificial person with a separate existence from the government. In its own name, a public corporation can buy, own, and sell real estate.
  • Government-provided capital consists of the following: A public corporation’s capital is provided by the government or government-controlled institutions. Many public firms, on the other hand, have begun to use the capital market to obtain funds.
  • Financial Independence: A public corporation has financial independence. It creates its own budget and has the authority to keep and use its profits for its operations.
  • Board of Directors Management: A Board of Directors, appointed or nominated by the government, is in charge of the company’s management. However, the government does not intervene with the corporation’s day-to-day operations.
  • Own Personnel: A publishing company employs its own personnel, whose appointment, compensation, and working conditions are determined by the company. The capital of a public firm is usually provided by the government. Other government bodies as well as financial entities can contribute to the corporation’s capital. Individual investors, on the other hand, are frequently denied access to such businesses’ stock. These government agencies have their own set of staff who are chosen by them. They are not government servants and are not bound by civic service requirements. The remuneration and working conditions of a public corporation’s employees are determined by the corporation itself.
  • Motive for Service: A public corporation’s primary goal is to provide services to the public, however it is also supposed to be self-sustaining and profitable. In most cases, the corporation’s management is vested in the government-nominated Board of Directors. Officials from the government or non-officials may serve as directors.
  • Accountability to the public: A public corporation is required to file an annual report on its operations. The Comptroller and Auditor General of India audits its accounts. A public corporation’s annual report and audited finances are presented to Parliament or State Legislatures, which have the authority to debate them. Another crucial element of a public firm is public accountability. It is accountable to the legislature, but having complete administrative authority. The corporation’s accounts are audited by the Auditor General, and an annual report is required to be presented to the legislature.

Benefits of a Public Corporation: The following are some of the benefits of a public corporation:

  • Bold Leadership as a Result of Operational Autonomy: Because it is free of government oversight, a public business has internal operational autonomy. As a result, it can function like a business. Management has the ability to make bold decisions including experimenting in its lines of business, allowing it to take advantage of commercial opportunities.
  • Legislative Oversight: The affairs of a public corporation are scrutinised by Parliamentary Committees or State Legislatures. A public corporation’s operations are also scrutinised by the press. This prevents the public corporation’s management from engaging in unethical practises.
  • Qualified and Contented Staff: The public sector provides good working conditions for its employees. As a result, qualified personnel might be attracted. Industrial relations issues aren’t as bad as they may be because to a well-trained and happy workforce. The employees are motivated to work hard for the company.
  • Customized Legislation: The special Act that establishes a public company can be tailored to match the specific demands of the corporation, allowing it to operate in the most efficient manner possible to fulfil its goals.
  • Political Changes Have No Impact: A public corporation is unaffected by political changes because it is a separate legal entity. It has the ability to preserve policy and operational consistency.
  • Pricing Policy that is Reasonable: Based on a cost-benefit analysis, a public firm pursues a sensible pricing policy. As a result, the public is generally satisfied with the public corporation’s provision of goods and services.
  • Exploitation Probability Is Lower: A public corporation’s Board of Directors is made up of representatives from various interest groups, such as labour and consumers, who are nominated by the government. As a result, the chances of the public corporation exploiting any class of society are reduced.


Author: Ankita Sharma,
Sharda University

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