Meaning, Characteristics and Advantages of Public Corporations.

Meaning, Characteristics and Advantages of Public Corporations.

A public corporation is a corporate body created by the special Act of the parliament. Such Act defines the power, duties, privileges and pattern of management of these organisations. Such an organisation is a statutory body to serve the general public. A public corporation is clothed with the power of the government, but possessed with flexibility and initiative of private enterprises. A public corporation enjoys complete autonomy in management.

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The followings are some of the essential characteristics of public corporation:

i. It is a corporate body created by the special act in the state or central legislature. The power and duties of these corporations are defined by this Act.

ii. It enjoys the status of a legal entity and as such it can enter into contract in its own name.

iii. It is completely owned by the government and as such no private individuals are entitled to purchase shares of these organisations.


iv. A public corporation is managed by a board of directors. The members of the board are from all walks of industry and commerce. The chairmen of these corporations are appointed by the government.

v. The entire capital is financed by the government. It was set up with a capital of its own and is entitled to borrow, use and re-use revenue from the sale of goods.

vi. A public corporation is primarily meant to render service and making profit is its secondary considerations.

vii. The employees of corporation are subject to service conditions laid down by the corporation. Civil service rules for the government do not apply to the employees of the corporation.



A public corporation enjoys a substantial advantage over other forms of public enterprises. The following are some of the advantages of public corporations:

i. A public corporation is able to manage its affairs with independence, initiative because it is an autonomous set up.

ii. It is relatively free to adapt to changing circumstances because of its autonomy nature.

iii. It maintains continuous existence in spite of changes in the government.

iv. It leads to high morale among the executives and other employees because of least government interference.

v. It can utilize the service of competent persons because it has its own cadres of employees.
vi. The board of directors consists of experts from business, labour and consumers. So a board of director can give better advice for the operation of the corporation.

vii. Since public corporations are accountable to the parliament, they are intended to render maximum service to the public instead of maximum profit.

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