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Meaning: -A Government Company is registered under Indian Companies Act, 1956. 51% or more of its paid-up share capital is to be held by central and/or state government. Examples of such organisation includes Indian Oil, BHEL, SAIL, GAIL, Hindustan Petroleum Ltd., and Bharat Petroleum Limited

The Main features are as follows:

1. Registration: -It is registered under the Indian Companies Act 1956. The provisions of Indian companies Act, 1956 are applicable in respect of conduct of meetings, rising of capital, appointment of directors, auditors, etc.

2. Annual Accounts: -The annual accounts of a Government Company are placed before the parliament or state government for review.

3. Management: - It is managed by a Board of Directors, most of whom are appointed by the government.

4. Exemption from Companies Act: - The Government reserves the right exempt such a company from certain provisions of the Indian Companies Act.

5. Objective: -It operates on commercial principles, and as such it aim is to make profit apart from other objectives.

6. Need for Privatisation: - There is growing move to privatize a good number of government Companies so as to improve their efficiency.

7. Capital contribution: - Its Capital is contributed by Central/State Governments and public. 51% or more of its paid up capital is contributed by the government. The public hold minority shareholding in Government Companies.

8. Staff: - This type of organisation can recruit its own employees and they are not government servants. Their terms of service are not governed by the civil service rules. However, the employees of departmental undertakings are Government servants, and are governed by Civil Service Rules.