A statutory corporation is an autonomous corporate body created by a Special Act of Parliament or state legislature with defined functions, powers, duties, immunities, etc. It is also called ‘public corporation’. It enjoys financial autonomy and is answerable to legislature only which creates it. It is an autonomous body fully financed by the government.
Statutory corporations have certain distinct features, which are discussed below:
(i) Statutory corporations are set up under an Act of Parliament and are governed by the provisions of the Act. Formation Came into existence by a special act passed in the Parliament, which defines the objects, powers, and functions of the corporation. The Act defines the objects, powers, and privileges of a statutory corporation;
(ii) This type of organization is wholly owned by the state. They are directly under the State Government. They have the power to appropriate their profits and also bear losses if any. State provides help to such corporations by subscribing to the capital fully or wholly. The government has the ultimate financial responsibility and has the power to appropriate its profits. At the same time, the state also has to bear the losses, if any;
(iii) A statutory corporation is a body corporate and can sue and be sued, enter into a contract, and acquire property in its own name. They can sue and be sued, enter into contracts, and purchase or sell property in their own name. Such corporations are managed by the board of directors constituted by the government. A corporation has a right to enter into contracts & can undertake any kind of business under its own name.
(iv) This type of enterprise is usually independently financed. It is not subject to the budget, accounting & audit controls. They are financed by borrowings from the government or from the public through revenue generated by the sale of goods and services. This corporation is answerable either to parliament legislature or state assembly whosever creates it. It obtains funds by borrowings from the government or from the public through revenues, derived from the sale of goods and services. Parliament has no right to interfere in the working of statutory corporations. It has the authority to use its revenues;
(v) A statutory corporation is not subject to the same accounting and audit procedures applicable to government departments. They are free from government accounting and audit control and are also not financed through government treasury. It can only discuss policy matters & the overall performance of corporations. After getting prior permission from the government, it can even borrow money within & outside the country. It is also not concerned with the central budget of the Government;
(vi) The employees of these enterprises are not government or civil servants and are not governed by government rules and regulations. Employees of various corporations receive balanced or uniform pay & benefits from the government. The conditions of service of the employees are governed by the provisions of the Act itself. They are recruited, remunerated & governed as per the rules laid down by the corporation.