Understand the Contrasts between Government and Public Limited Companies

[Ishita Ramani]

Introduction  

A company is fundamentally an artificial person created by legislation. It is a group of people with a shared seal, enduring inheritance, and independent legal status. Whether it is a government company or a public limited company, it significantly impacts the national economy. The public is still unsure of the differences between a government company and a public limited company. Here, I shall define government firms and public limited companies in this blog post, along with their differences.

Government Company

A government company is any kind of firm in which at least 51% of the paid-up capital is owned by the federal, state, or municipal governments, either jointly or separately. For instance, 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 are founded with two main objectives to be considered, as follows:

Public Limited Company

A Firm that obtains money through the purchase and ownership of its shares by the general public is known as a public limited company. It has limited liability protection along with all the advantages of a legal company. It is registered and administered by the 2013 Companies Act. To form a firm in India, it can have as many members or shareholders as it wants, although a minimum of seven members are needed.

Recommended Reading: Updates to Schedule III of the 2013 Companies Act

The Key differences between government and public limited company

Government Company

• A company is considered a government firm if the central government, a state government, or both own 51% of its paid-up capital.
• The appointment of the government firm’s auditor is done based on the counsel of the Comptroller and Auditor General of India (CAG).
• In government firms, The MOA and AOA control employee appointments
• A government company’s annual report and audit report are presented to parliament. If the government firm is a state government firm, its annual reports are submitted to the state legislature.
• In contrast to a Public Limited Company, a Government firm is not compelled to publish as much information.

Public Limited Company

• A firm with a minimum paid-up share capital of Rs 5 lacs that has shares owned by the public is known as a public limited company.
• On the other hand, certain members of a public limited company appoint the company’s auditor.
• In a public limited company, the director’s authority to appoint its employees
• The public firm’s annual reports are presented to the members of the organization.
• However, a public company is required to provide essential information to the public.

Conclusion

The Companies Act of 2013 governs both public limited companies and government companies. The public company is owned and managed by the people who purchase PLC shares, whereas the government company is governed by governmental entities. This is the primary contrast between the two.