Business

Difference between Statutory Corporation and Government Joint Stock Company

Difference between Statutory Corporation and Government Joint Stock Company

Difference between Statutory Corporation or Public Corporation and Government Joint Stock Company or Government Company

Statutory Corporation and Government Company both are the state enterprise. There is a little difference between the public corporation and the government company. Statuary company is incorporated only by and under the governance of a state under any particular act or regulation. Generally, it is a company limited by shares but the share is not traded in the market. The fundamental difference between the two lies on the basis of their legal authorization and modes of incorporation. Some of the differences between these two companies are as follows:

Statutory company

  • Formation: Statutory Company is formed by the order of the president or special Act of parliament or government special ordinance. It is a corporate body created by either Parliament or State government by a particular act that defines its powers, duties, and functions.
  • Declaration of dividend: Usually dividends are not declared in many corporations.
  • Sale of share: These corporations cannot sell shares to the public.
  • Autonomy: Statutory Corporations according to their nature can enjoy autonomy in internal matters. It enjoys a considerable degree of autonomy with no interference of government in day-to-day activities.
  • Objective: The objectives and scope of activities of the statutory company are mentioned in the related activities. There is no scope of private participation in the case of a statutory corporation.
  • Act: These corporations are controlled by the mimed Act and Ordinance.
  • Capital: Statutory Corporations are formed by government donation, loan, and paid-up capital.
  • Operation and management: Statutory corporations are operated and managed by the board of directors appointed by the government.
  • Size: Statutory corporations arc large in size.
  • Production and Distribution: Except few, most of the statutory corporations are directly related to the production and distribution of products and services.

Government Joint Stock Company

  • Formation: The Government Company is formed in accordance with the Company Act-1994. It is governed by provisions of the Companies Act.
  • Declaration of dividend: In such an organization dividends are declared and sometimes bonus shares are also issued out of the reserves.
  • Sale of share: 49% of shares of this company can sell to investors within a country and abroad.
  • Autonomy: Government Joint Stock Company cannot enjoy the facility of autonomy. A government company runs on commercial principles like a private enterprise and enjoys a higher degree of freedom from government interference.
  • Objective: The objectives and scope of activities of Government companies are mentioned in the Memorandum and Association. There is a scope for private participation in the capital of the company is partly owned by the government.
  • Act: Government companies are regulated by the Companies Act 1994.
  • Capital: The maximum capital of Government companies is provided by the government. But private investors also invest as per their shares.
  • Operation and management: Government companies are managed and operated by a board of directors including government and private directors. But the maximum number of board members is appointed by the government.
  • Size: Government companies are large in size but smaller than statutory corporations.
  • Production and Distribution: Government companies are always related to the production and distribution of products and services.

At last, we can say that statutory corporation and Government Corporation both arc controlled under government authorization but there are many differences information, control, and operations.