Meaning and Features of Public Corporation

Meaning and Features of Public Corporation


A public corporation is a “person” created by an Act or State law, to act severally however underneath the supervising of assorted restrictive regencies. A public corporation is an artificial person created by law which can within the different be mentioned as a statutory corporation or body.

A public corporation is that kind of public enterprise that is made as an autonomous unit by a legislative act of the Parliament or the State law makers. Since a public corporation is made by a Statute; it’s conjointly called a statutory corporation. The Statute defines the objective, powers and functions of the general public corporation Statute define the objectives, powers and functions of the general public corporation. Insurance Corporation of India, the Indian Airlines, the Air India International, Oil and gas Commission etc are some examples of public corporation, in India. Public Corporation is a body company created by an Act of Parliament or law-makers. Its name is notified within the official gazette of the Central or regime. It is a man-made person with the flexibleness of the non-public sector and also the powers of the Government. They are discovered with the target of ending a selected sort of endeavor. The powers and functions of public corporation are well outlined and that they are financially freelance. These organizations are fashioned for administering nationalized industries or undertakings. Several service organizations of the Government are discovered with the kind of companies.

Basically, a public corporation is associate extended plan of the shape of jint stock corporations. A public corporation is outlined as a company body specially created by a legislative enactment with clearly outlined powers and functions and enjoying extended money and body autonomy. It is creation of law and represents the foremost vital development within the field of management of state enterprises within the gift century.

President Roosevelt gave a classical definition regarding Public Corporation. The president, in his message to the American Congress, observed, as

“a corporation has the ability of the government however possessed with flexibility and initiative of a non-public enterprise.”

Features or Characteristics of Public Corporation:

The Characteristics of a statutory corporation may be summed up as:

  • Public Corporation is made by law

    • A Public Corporation is made by a special legislative enactment, shaping its objectives, powers, privileges and also the style of management and its relationship with the government.
  • Public Corporation is a body company

    • It is thought-about as an individual within the contemplation of law. As such, it will acquire, hold and sell properties in its own name. it will sue or could also be sues by others.
  • Public Corporation is a closely-held by the State

    • The Government usually provides the capital of the general public corporation. Alternative Government agencies and money established may contribute to the capital of the corporation. However individual investors are usually disadvantaged from feat the shares of such corporation.
  • Public Corporation is free from Government Controls

    • Public corporations are comparatively freed from political, Parliamentary and division interference within the exercise of the powers unconditional.
  • Public Corporation enjoys money autonomy

    • Public corporation not solely enjoys body autonomy however conjointly money autonomy. Aside from appropriation to produce capital or to hide the losses, the general public corporations are typically supported severally. They prepare their own budgets and have the ability to retain their earnings. They can conjointly borrow funds from the general public or from the government or alternative money establishments. They’re usually exempted from most of the restrictive and prohibitive statutes applicable to the expenditure of public funds.
  • Service Motive

    • The management of the corporation usually vests with the Board of administrators’ nominative by the government. The administrators could also be officialdom or non-officials.
  • Management

    • A corporation is predicate to behave commercially within the same manner as a non-public enterprise i.e. they’re imagines to perform with efficiency on sound industrial principles. This doesn’t mean that the companies are expected to form profits.
      They can create profit however not at the expense of the shoppers. Thus, the general public corporation profit primarily works for service, and profit is merely a secondary thought.
  • Public Accountability

    • Public accountability is another necessary feature of a public corporation. Although it enjoys complete autonomy in its body areas, it’s responsible to the legislative assembly. Its accounts are audited by the corporation and also the Auditor General and its annual report should be placed before the legislative assembly.
  • Standing of workers

    • The employees of the corporation don’t seem to be the servants of the government and don’t seem to be ruled by government officials Rules. They’re used and paid out of the funds of the corporation.
      The above-referred characteristics of the corporation reveal that it’s a mix of public accountability and business management. It therefore offers us the simplest of each public possession and personal enterprise.

Advantages of the Public Corporation

  • Effective Style of Organization

    • The public corporation is taken into account as an efficient body instrument that follows a middle course between the division organizations on the one aspect and in private closely-held and managed corporations on the opposite aspect.
  • Public Corporation are versatile in nature

    • The public corporation enjoys most autonomy in addressing its affairs. Its nearly free from rigid and protracted management of the government. Therefore, it will manage its affairs with initiative and suppleness.
  • Public corporations are free from red tapism

    • Since the Board of administrators is entrusted with powers to form necessary call, fact choices are probably. It may regulate its policies in line with the dynamic business conditions and take prompt actions. Therefore it’s free from the evils of red tapism related to the division organization.
  • Initiative

    • Being an autonomous body, it will experiment new lines and exercise initiative within the business affairs.
  • Service motive

    • The evils usually related to non-public enterprise like profiteering, exploitation, legitimate speculation are fully absent within the workings for the corporation. Its principal motive is service. Hence, the interests of the shoppers are well protected.
  • Easy financing

    • The public corporation will raise funds terribly simply from varied sources. The finance public conjointly promptly subscribes to the loans floated by them as they think about the loan bonds additional safe and sound.
  • No Exploitation of the staff

    • The employees of the general public corporation are well paid. Since their aim isn’t to maximize profits, they’re in a very position to pay higher wages and bonus to their workers. They’re acting as model-employers.
  • Expertise Management

    • The Government will appoint even an outsider because the manager of the corporation. By appointing business consultants, the corporation will avail their valuable and experience services. It may appoint the representatives of the varied interests like labour, shoppers etc. Therefore, there’s no risk for exploitation of any section of the society.
  • Economies of huge scale operations

    • Public corporations are thought-about as a viable style of organization for launching enterprises on giant scale. Besides, businesses, that don’t manufacture enough profits throughout the initial stages, may be organized solely as corporations. Solely this kind if organization will do justice whenever public utilities and social services are concerned.

Demerits of Public Corporation

Experience of the operating of public corporation have shown a number of its defects and raised bound issues. The necessary defects are:

  • Public Corporation has restricted autonomy

    • The Corporation, in apply, get pleasure from neither complete autonomy nor flexibility. Their autonomy is somewhat restricted.
  • Political Interference

    • The Ministers and also the politicians oftentimes interfere with the working of the corporation and influence their policies. In several cases, politicians are appointed because the Chairman or Managing administrators of such corporation. They possess no spare expertise within the business lines of the corporation. Thus the management of the corporation is additionally terribly poor.
  • Public Corporation are Evils of massive business

    • As massive undertakings are usually organized as public corporation, the evils of massive business are certain to exist all told the activities of the corporation.
  • Labour issues

    • bridging the gulf between the labour and management extremely poses a tough downside to the management that is already inefficient. In reality, the experiences are additional bitter and painful publicly Corporation.
      The staff usually demands abnormal increase in their wages notwithstanding the corporation is functioning at a loss. Exaggerated wages can additional increase the degree of losses, which are to be created smart out of the government funds. In India, we are able to hardly realize one or two public corporations liked BHEL, Neyveli Lignite Corporation, which are making profits.

Author: Neha Ghuge,
Government Law College, Mumbai/Second Year

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