There are various types of public enterprises On the basis of organizational affiliation and management, public enterprises can be classified into following types:
Departmental Undertaking
Those business enterprises which are totally invested and controlled by the specific ministry of government are called departmental undertaking. Under the departmental undertaking, all business activities are carried on under the overall control of the concerned ministry. The features of the departmental undertaking:
- Formation
Departmental undertaking is created by the government. It is attached to a government ministry. The earnings of the government are deposited to the government
- No separate legal entity
The undertakings are the part of government establishment. Hence, it has no separate legal entity. The departmental undertaking cannot purchase and sell assets of enterprises by its own name.
- Management and control
It is managed by the officials of the concerned government department. It strictly follows government rules and regulations. It is controlled by the government according to existing legal provisions. It required employees as like public servant.
- Rules and regulations
The rules and regulations provided by the government should be followed by the departmental undertakings. It has to follow the same system for accounting, budgeting, audit procedures and other rules and regulations of the undertakings.
- Accountability
The departmental undertaking is accountable towards parliament and government of a country. The undertaking is accountable to the people like all other departments of the government through the people like all other of the government through the parliament regarding its budgeting, accounting, and audit matters.
Public corporation
Public corporation is the most widely used form of organizations for operating a public enterprise. Its powers, duties,objectives, privileges, scope of operations and management are all defined by the act. The main purpose of the public corporation is the maximization of social welfare.This company invests a large amount of capital to provide product or service for the general public.
The features of public corporation are as follows:
- Formation
Public corporation is created by a special act of parliament. The act defines the role, duties, power, objectives, function as well as the relationship of the corporation with other departments of the government
- Separate legal entity
A public corporation can adopt its financial management system. It can sell and purchase the assets in its own name. It can sue and can also be sued.
- Government ownership and control
It is totally controlled by the government. However, some portion of its share capital is also held by the general public. But these private shareholders are in a minority.
- Own employees
The employees of the public corporation are not the civil servants they have their own employees. It is free to frame rules and regulations for recruitment, promotion, training of employees and to develop other terms and condition of employment.
- Service motive
The motive of the public corporation is to pursue public welfare activities and to render service to the society at large. It may have even to incur losses for this purpose.
Government Companies
Public enterprises established under the company law of the country are called government companies. This type of company is a popular enterprise and enjoys all the privileges of a joint stock company. The liability of the government is limited. The features of government companies are:
- Incorporated under the Company Act
A government company is incorporated under the common company law of the country. These companies are registered as private limited companies through their management and their control vest with the government. This is a type of organization where both the government and private individuals are shareholders. In
- Government ownership
The government provides at least 51% of share capital. But the government liability is limited to the face value of shares subscribed. In other words, the government holds majority shares of the company.
Separate legal entity
A government company has its separate legal entity which is different from the government himself. It can sell and purchase assets in its own name. -
Board of Directors
Board of directors manages the government company. All activities of the company are operated, managed, and controlled by the board of directors. - Financial autonomy
A government company can manage its own independent financial policy on its own. It prepares a budget, formulates financial policies and develops accounting system for its successful operations.