Brief notes on the Characteristic Features of Government Companies


Some of the State Enterprises are established in the form of Joint Stock Companies as per the regulations laid down under the Indian Companies Act, 1956.

The Companies Act of 1956, defines a Government Company as “any company in which not less than 51% of the share capital is held by the Central Government or by any state Government or partly by one or more State Governments and includes a company which is a subsidiary of a Government Company as thus defined”.

Characteristic Features:


The following are the features of a Government Company.

1. Organisational format:

The organisational format resembles that of a Joint Stock Company incorporated under Companies Act, 1956.

2. State ownership:


The entire capital or 51% or more of the capital is owned by the Government or Governments.

3. Nomination of directors:

As in case of Public Corporations, even in a Government company the directors are nominated by the Government (State or Central).

4. Ministerial control:


As in the case of Departmental organisations, in a Government Company too, the overall control is under the concerned minister under whose ministry the company is formed.

5. Government auditors:

The auditors are always appointed by the Government to inspect the books of accounts of the Government Companies.

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