A government company is a company in which not less than 51% of the paid-up share capital is held by the government. This can be the Central Government, any State Government(s), or a combination of both
. Key characteristics of a government company include:
- Ownership and Control: Majority ownership by the government ensures significant control over management and strategic decisions
- Purpose: These companies are established to serve public interest, fulfill socio-economic objectives, and provide essential goods and services, often prioritizing public welfare over profit maximization
- Legal Framework: They are formed and governed under the Companies Act, 2013, complying with corporate governance, transparency, and reporting standards applicable to companies in India
- Board Composition: The board typically includes government nominees to align the company’s operations with government policies
- Funding: Government companies may receive funding from government budgets, grants, or loans, and may also generate revenue through their operations
Examples of government companies in India include Coal India Limited and Bharat Heavy Electricals Limited (BHEL)
. In summary, a government company is a corporate entity predominantly owned and controlled by the government, created to undertake commercial or developmental activities that serve the public interest and contribute to national economic and social objectives
