Introduction
A company is a group of individuals with a common seal, permanent inheritance, and individual legal entity. It is an artificial person established from the rules and regulations of Companies Act, 2013. A company has a great effect on the economy of any nation, whether it is a government company or a public limited company. Both companies sound similar that is why people are still confused of the differences between public limited companies and government companies. In this blog, we will learn about what a government company and a Public Limited Company, along with the differences between them.
What is a Government Company?
A government company is a type of business in which at least 51% of the paid-up capital is controlled either jointly & separately by the federal, state, or municipal governments. Multiple companies are controlled by the government, for example the State Trading Corporation of India, Bharat Heavy Electrical Limited, Coal India Limited, Steel Authority of India Limited, and other companies. India's public sector companies have been created with two main purposes in mind:
- To increase the distribution of wealth and income among the people living in the nation.
- To increase the nation's rate of development
What is a Public Limited Company?
An organization that earns money through the purchase and ownership of its shares by the general public is known as a public limited company. A Public Limited Company has limited liability protection together with all the advantages of a legal company. It is registered and regulated in accordance with the Companies Act, 2013. In India, a company can have as many members or shareholders as it wants but a minimum of seven members is required.
Key Differences Between Government Company and Public Limited Company
Listed below are the difference between a Government Company and a Public Limited Company:
1. A government company is one in which the federal government, a state government, or both jointly hold 51 percent of the company's paid-up capital. On the other hand, a Public Limited Company, is a company whose shares are held by the general public and have a minimum paid-up share capital of Rs 5 lacs.
2. The auditor of the government company is chosen on the recommendation of comptroller and audit general of India's (CAG). On the other hand, the auditor of a public company is chosen by its shareholder or members.
3. The director of a Public Company has the authority to hire new staff members. But the hiring process in government companies is controlled by MOA and AOA of the company.
4. The required amount of information about a government company to the public is less than a public limited company. A Public Company must give access to all the relevant information to the public.
5. Annual report and audit report of a government company are sent to the parliament of India. In case the government company is a state government company, annual reports are sent to the state legislature. On the other hand, The annual reports of the Public Company are put in front to the members of the company.
Conclusion
Public Limited Company and Government Company are regulated by the provisions of the Companies Act, 2013. One of the main differences between the public limited company and government is that shares of public company are owned and managed by the people, but the shares of government company are managed by government agencies.
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