What is Government Company?
A government company is a business entity owned and operated by the government at either the central or state level. It 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. The 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.
Examples of Government Companies include Life Insurance Corporation of India (LIC), Bharat Heavy Electricals Limited (BHEL), and Indian Oil Corporation (IOC).
Geeky Takeaways:
- Government Companies are entities that are owned and run by either the federal or state governments. They are bound by certain laws and are subject to government control and regulations.
- Government-owned Companies operate as legal entities separate from the government, with their own rights, liabilities, and obligations.
- Government companies often operate in sectors deemed critical to national development, security, or public welfare. They may engage in industries such as infrastructure, defense, energy, telecommunications, and healthcare, where government intervention is necessary to ensure stability and equitable access.
- Government companies may receive financial support from the government in the form of equity investments, subsidies, grants, or loans.