Principal Characteristics of Statutory Corporations

What is a Statutory Corporation

A company formed under an Act of Parliament or State Legislature is called a Statutory Company/Corporation. The special enactment contains its constitution, power, and scope of its activities. 

The principal characteristics of a statutory corporation are:

1. It is owned by the State.
2. It is created by a special law of Parliament or State Legislature.
3. Parliamentary scrutiny: Parliament has the right to discuss and determine matters of major policy concerning the nationalized industries, the day-to-day conduct of their business by the public corporations should be immune from parliamentary inquisition. 
4. Freedom in regards to personnel: Excluding the officer taken from the Government department on deputation, its employee are not civil servants and are not governed by Government regulations in respect of conditions of service.
5. Each statutory corporation is a body corporate and can be sue and to be sued, enter into contract and acquire property in its own name.
6. Distinct relation with the Government: The relationship of public corporation and Government is the latter's power to issue directions.
7. Independent Finances: A statutory corporation is independent in respect of finances. Except for appropriations to provide capital or to cover losses, it is usually independent in its finances. It can obtain funds by borrowing either from the Government or from public or from selling of goods and services and has the authority to use and re use its revenue.
8. Commercial Audit: Statutory Corporations are audited in a way which is directed by Comptroller and Auditor General of India(CAG) except in case of banks and financial institution where chartered accountants are auditors.