Statutory corporations are body corporate formed by a particular act of parliament or by the central or state legislature. It is fully financed by the government. Its management model, its powers, and functions, the area of activity, rules, and regulations for its employees and its relationship with government departments, etc. are specified in the concerned Act.
Advantages of Statutory Corporation
The corporation that is created by the Act to serve some special purpose is called a statutory corporation. So these corporations have some advantages. Advantages of the statutory corporation are stated below:
- Easy management:
The formation of Statutory Corporations is easy. The principal merit of this type of organization is “Initiative in planning and execution, autonomy is finance and elasticity in administration and freedom from departmental control”. It can be easily formed by passing Special Act, either at Legislature Assembly or at Parliament.
- Opportunity as a public company
It enjoys the usual advantages of a public company such as limited liability transferability of shares etc. The profits that such corporations earn are utilized for the benefit of consumers and the community. Defects of exploitation, speculation, and profiteering, etc are avoided in the case of statutory corporations.
- Sovereign immunity
This device enables a government to waive some of its sovereign immunities within limited and well-defined areas. The result is that the corporation can act in its own name rather than that of the state.
- Free from rigidity and dilatory actions
It does not suffer from the detects of rigidity and dilatory action which inherent in government administration. At the same time, it retains the flexibility and effectiveness of a private enterprise. On these grounds some views of this organization as the best administrative machinery for public enterprises or public utility services.
- Social Welfare
The main object of statutory corporations is to give essential services at a lower price. It works for protecting the interest of general people. Hence society at big is benefited.
- Employment opportunity
These organizations can create more employment opportunities in the country for establishment and operations. It can provide better facilities & attractive terms of service to staff to secure efficient working from its staff.
- Legal entity:
These corporations can enjoy the flexibility of independent and separate legal entities. Investment, market, production, recruitment, planning, accounting & the decision once taken can be easily changed.
Statutory corporations can have their own working patterns. It is free to take any decision relating to capital collection. There is no political interference in day to day working of corporation.
- Quick Decisions
Quick decisions are possible because all policy decisions are taken by the Board and they can execute these decisions easily. There is no obstruction of government in any type of decision.
- Self Accounting System
A statutory corporation is free to have its own accounting pattern. It need not follow Budgetary Accounting and Audit Control of government. It is free to prepare its own budget.
These corporations can run their business activities more freely than government departmental organization. These are the advantages that statutory corporations enjoy.