What is Statutory Corporation? | Meaning and Features

Meaning of Statutory Corporation

Statutory Corporations are autonomous corporate bodies established by a special act of Parliament or a state legislature, with predefined functions, duties, powers, and immunity as defined by the act. Statutory corporations have financial autonomy and are accountable to the legislature under which they were established.

The concerned Act specifies its management pattern, powers and functions, area of activity, rules and regulations for its employees, and relationship with government departments, amongst other things. It enjoys the legal identity of a corporate person and has the capacity of acting under its name.

Features of Statutory Corporation

1. Corporate Body: 

Corporate bodies are statutory corporations. They are legal entities that are created by the law and are artificial persons. A government-appointed board of directors oversees the operations of these corporations. These corporations have the authority to enter into contracts and conduct business under their names.

2. State-owned Corporations: 

Statutory corporations are wholly owned by the state, which provides full support by fully subscribing to the capital.

3. Employee Autonomy: 

Despite being owned by the government, employees of statutory corporations are not considered government employees. Employees are hired and paid by the company’s policies.

4. Financial Autonomy: 

Statutory corporations can make financial decisions on their own. They are not subject to any kind of accounting, budgeting or auditing. However, statutory corporations can borrow money from the government in times of need.

5. Accountable to the Legislature: 

Statutory corporations have internal management and operation freedom, but they are accountable to the state or government legislature that established them.

Merits and Demerits of Statutory Corporation: The merits of a statutory corporation include quick decision, administrative autonomy, etc., and its demerits include lack of initiative, rigid structure, etc.