Business Environment Statutory Bodies and Corporations :
Statutory companies are known as Statutory Bodies and Corporations or Public Corporations. These are the public bodies operated by the statute. For e.g. – Reserve Bank of India (RBI), Life Insurance Corporation (LIC), Employee State Insurance Corporation etc. In simple terms, it means a company or a body set up by statute.
The essential features of a public corporation are as under
- Management: Statutory Corporations are managed by the Board of Directors, appointed by the government.
- Accountability: Statutory Corporations are account and audited by the Comptroller & Auditor of India (CAG) as they are accountable to public & parliament. This ensures public accountability.
- No Interference: In day to day working of the corporation, political interference is not allowed because Statutory Corporations have its own pattern.
- Objectives: It works on profit objective and as such its activities are commercial in nature.
- Answerability: It is answerable to the Parliament as regards to its objectives.
- Capital Contribution: Its capital is wholly owned by the Government. The public is not the shareholders of this type of organization as compared to that of Government Company.
For more Business environment notes click CS Foundation online classes .
Advantages of a Statutory Corporation:
- Formation: Statutory Corporations are easy to be formed. They can be easily formed by passing Special Act, either at legislature Assembly or at the Parliament.
- Autonomy: There is no political interference in day to day working of the corporation. Statutory Corporations can have its own working pattern.
- Flexibility: Statutory Corporations enjoy full flexibility in its operations. It is free to take any decision related to investment, capital collection, production, recruitment, planning, accounting, etc.
- Capital Raising: Capital is contributed at large by the government to the statutory corporations but they can easily and freely collect capital from the general
- Quick decisions: Quick decisions are possible because all the decisions are taken by the Board of Directors and Board can implement these decisions easily.
- Staff Members: These corporations are free to have its own recruitment policy.
Disadvantages of a Statutory Corporation:
- Difficult Formation: Incorporation of Statutory Corporations is difficult and lengthy. They require lengthy documentation, complicated formalities & passing of statute.
- Rigidity: The policies once approved, the statute once passed require cannot be changed easily. It can be done by the parliament only & this is also very time-consuming.
- Political Interference: The efficiency of the corporation is affected due to the political interference.
- Wastage of Resources: Wastage of physical, capital and manpower resources in several cases is very often with statutory corporations.
We are Takshila Learning, your online education partner. We offer CS coaching classes through online/offline mode. Online CS coaching classes are categorized into CS Foundation, CS Executive, and CS Professional online classes. Our motive is to assists student in their journey of CS Preparation. Join today and brighten your future by getting associated with us.
For more cs foundation course important topics :
Follow us on a Social media