However, instead of being owned and operated by the government, quasi-public companies are privately owned and operated. They benefit from receiving some government funds and are mandated by the government to provide public services. So, rather than creating value and maximizing wealth for shareholders, they should prioritize that mandate. Being a distinct legal entity, a public corporation is not much affected by political changes. Public corporate law is related to contract and commercial law and deals with the operations and formation of a corporation.
The Press also keeps a watchful eye on the working of a public corporation. This keeps a check on the unhealthy practices on the part of the management of the public corporation. A publication corporation has its own staff; whose appointment, remuneration and service conditions are decided by the corporation itself. Read this article to learn about the meaning, features, advantages and limitations of public corporation. A corporation has a perpetual life, meaning the deaths of shareholders and officials don’t change the corporate structure.
What Is an Indian Public Corporation?
A public corporation is a legal entity that is separate and distinct from its owners. Public corporations enjoy most of the responsibilities and rights that an individual possesses. For example, a corporation has the right to loan and borrow money, enter into contracts, sue and be sued, own assets, hire employees, and pay taxes. A public corporation is often referred to as a “legal person.”
- The company provides essential public services to citizens at an affordable price.
- A public corporation is a company whose shares are listed to be traded on a public market, such as the New York Stock Exchange (NYSE).
- The government will maintain it because it provides considerable social benefits to the public.
- Annual report and audited accounts of a public corporation are presented to the Parliament or State Legislatures, which is entitled to discuss these.
The main difference between the two is that a quasi-public purpose corporation is operated privately. The private or independent owners of the business will usually benefit from receiving some amount of government funding. A public purpose corporation is a company that’s been formed and chartered by the state to fulfill a government function. It may also be referred to as a public benefit corporation. Some states will define a public purpose corporation as a charitable corporation or a nonprofit, even if it’s created with private funds.
A public authority is another category of public purpose corporation. It’s formed by a governing body that will use it to assist the public. A public authority will tend to have increased bureaucratic control and will often regulate federal and state infrastructure.
Upon being formed, a public authority is operated by the government as an independent legal entity and is usually protected from political pressure. A quasi-public purpose corporation is a variation of the public purpose corporation. Although similar, a quasi-public corporation is formed with the intention of benefiting the public.
Annual report and audited accounts of a public corporation are presented to the Parliament or State Legislatures, which is entitled to discuss these. A public corporation is that form of public enterprise which is created as an autonomous unit, by a special Act of the Parliament or the State Legislature. Not facing competitive pressures, there is no reason for the company to operate more efficiently. In addition, companies also do not strictly pursue profit targets, making them less concerned about efficiency.
A public corporation cannot be formed without passing a special Act; which is a time consuming and difficult process. Hence, the scope for setting up public corporations is very restricted. As such, managerial efficiency of public corporation is not as much as found in private business enterprises. A public corporation follows a reasonable pricing policy, based on cost-benefit analysis.
Difference Between Publicly Held Corporation and Public Purpose Corporation
Public corporation offers attractive service conditions to its staff. Because of qualified and contented staff, industrial relations problems are not much severe. Affairs of a public corporation are subject to scrutiny by Committees of Parliament or State Legislature.
As such, there is lesser likelihood of exploitation of any class of society, by the public corporation. Add public corporation to one of your lists below, or create a new one. Because the pressure to be more efficient is low, the company is likely to consume more costs. As a result, it could cost a large government budget to subsidize them. In addition, corrupt practices within the company also increase costs.
Public Corporation Law and Legal Definition
Public corporations are established to help provide services to the public. Therefore, they have a service motive, and profit is only a secondary consideration. For example, state-owned airlines operate to facilitate the transportation of residents in remote areas.