A statutory company, also known as a government-owned corporation, is a type of business organization that is owned and operated by a government. It is a legal entity created by a government to undertake commercial activities on behalf of the government. Statutory companies are established by an act of parliament or legislature and are regulated by a specific piece of legislation.
One of the main characteristics of a statutory company is that it is a separate legal entity from the government, which means that it has the same legal rights and responsibilities as a private company. This includes the ability to enter into contracts, borrow money, and incur liabilities. However, unlike private companies, statutory companies are not motivated by profit and are not required to pay dividends to shareholders.
There are several reasons why a government may decide to establish a statutory company. One reason is to provide a public service that is not being adequately provided by the private sector. For example, a government may establish a statutory company to operate a public transportation system or to provide electricity to a particular region. Another reason is to engage in commercial activities that are related to the government's core functions, such as defense or natural resource development.
Statutory companies are typically governed by a board of directors, which is responsible for setting policies and making strategic decisions. The board is usually appointed by the government and is accountable to a government minister or department.
While statutory companies have many similarities to private companies, there are also some important differences. For example, statutory companies are subject to more stringent financial reporting requirements and are often subject to greater levels of public scrutiny. In addition, the government may have more influence over the operations of a statutory company than it would over a private company, as the government is the owner and regulator of the company.
In summary, a statutory company is a type of business organization that is owned and operated by a government. It is a separate legal entity from the government and has the same legal rights and responsibilities as a private company. Statutory companies are established to provide a public service or to engage in commercial activities related to the government's core functions, and are governed by a board of directors appointed by the government.
