Intermediate · Paper 5 – Business Laws & Ethics · Companies Act, 2013 · 2:40
English
Transcript
A company made by a special Act, a company registered under company law, and a company owned by the Government. Are they all the same? Let's find out!
Deepa has just joined Vaigai Power Limited in Madurai. The State Government holds seventy four per cent of its shares.
Farhan: Congratulations, Deepa! So now you are a Government employee!
Deepa: Wait, Farhan. Let's check the law first.
First, the statutory company. It is formed under a special Act passed by Parliament, like the Life Insurance Corporation and the Reserve Bank of India. It need not have a memorandum of association. It is governed by its own special Act, and as per Section 1, sub section 4, the Companies Act applies only where it is not inconsistent with that special Act.
Next, the registered company. It is registered under the Companies Act, 2013, or under an earlier company law. It may be limited or unlimited, and public or private. Entities that are not registered are called unregistered entities.
Now, the Government company. Section 2, clause 45 says it is a company in which not less than fifty one per cent of the paid up share capital is held by the Central Government, or by any State Government or Governments, or partly by both. A subsidiary of a Government company is also a Government company.
Deepa: The State holds seventy four per cent. So Vaigai Power is a Government company!
But is Deepa a Government employee? No! In Heavy Engineering Mazdoor Union versus State of Bihar, the Supreme Court held that a Government company is not a department of the Government. It has a separate legal personality, so its employees are not Government employees.
Farhan: Oh! So you are a company employee, Deepa. Still, congratulations!
Exam tip! A statutory company is made by a special Act. A Government company is registered under the Companies Act, with at least fifty one per cent held by the Governments. And it can be a private or a public company.
Let's recap. Statutory company: a special Act. Registered company: registered under company law. Government company: fifty one per cent or more with the Governments. And its employees are not Government employees.
Now try the test in the MPA app. In the next video, we will learn about the foreign company.