Question

Answer the following in detail.

Explain Statutory Corporation and its features.

Answer 1

(A) Meaning:

Statutory Corporations are autonomous bodies established under special legislative Acts. A statutory corporation is formed under a Special Act of Parliament or State Legislature. The powers, duties, functions, and scope of operations are laid down in the Act. LIC, IFCI, SBI, UTI, Air India are examples of public corporations. Statutory Corporation is a body with a separate existence, which can sue and be sued and is responsible for its own finance. It is administered by a board appointed by a public authority to which it is answerable.

(B) Features of the statutory corporation:

1. No political Interference: It enjoys freedom from political parliamentary and government in day-to-day management.
2. Own Staffing System: They recruit their own employees and they are not a government servant. Employees' terms and services are not governed by civil service rules.
3. No Political Interference: It enjoys freedom from political, parliamentary, and government interference in day to day management of its affairs.
4. Financial Autonomy: Statutory Corporations are financially autonomous. After getting the prior permission from the Government, It can even borrow money within and outside the country.
5. Independent Identity: They have an independent identity different from the government. Though the overall business policies are formulated by the government, they have administrative autonomy and hence operational flexibility.
6. Special Act: They are established under a special Act passed by the Parliament. Its objectives, power, and functions are regulated by the Act.
7. Corporate Body: Statutory Corporation is a corporate body. It has a separate legal entity distinct from its members and thereby can enter into contracts and acquire property on its own name.
8. Answerable to the Legislature: A statutory corporation is answerable to Parliament or State Assembly whomsoever creates it. Parliament has no right to interfere. Though the overall business policies are formulated by the government, they have administrative autonomy and hence operational flexibility.
9. Legal Status: As a body corporate, it has a separate legal entity, distinct from its members and thereby can enter into contracts and acquire property in its own name.
10. Independent Accounting System: They are not subject to budget accounting and audit laws and procedures applicable to government departments. But financial reports are placed in the Parliament for discussion.