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Govt. Company Vs. Govt. Corporation
Generally people think there is no difference in Govt. Company and Govt. Corporation. They generally use these words interchangeably while this is not the case.
As per Section 617 of the Companies Act, 1956, Govt. Company means any Company
a)         in which not less than 51 per cent of the paid up share capital is held-
-         by the Central Government; or
-         by any State Government(s); or
-         jointly by the Central Government and any State Government(s).
b)        which is a subsidiary of a Govt. Company.
Therefore, in order to be Govt. Company
-         there must be a company with in the meaning of Companies Act, 1956; and
-         it shall further complete requirements of Section 617.
Examples:     National Thermal Power Corporation Limited (NTPC),
Delhi Metro Corporation Limited (DMRC),
HaryanaState Industrial and Infrastructure Development Corporation Limited (HSIIDC) etc.
While a Corporation means a entity formed under a separate Act of Parliament/State Legislature.
e.g.                  Life Insurance Corporation formed under LIC Act, 1956
                        Food Corporation of India
                       General  Insurance Corporation
                       Haryana Financial Corporation etc.
Thus there is a lot of difference in Govt. Company and Corporation.
Although the Govt. Companies generally use word Corporation in its name but by adding this name they cannot be called Corporations. To be a Corporation entity must be formed under a separate Act of Parliament/State legislature.
Contributed by:
CA. Jatin Bansal

Published by

Professional Careers Academy
(CA/CS/ACCA Commerce Coaching Institute)
Category Corporate Law   Report

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