Government Company

Section 617 defines a Government Company as any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government of Governments, or partly by the central Government and partly by one or more State Governments and includes a company which is a subsidiary of a Government Company.

Government Companies are as much governed by the provisions of the Companies Act as any other company; but by virtue of s.620 the Central Government may direct that any of the provisions of the Act will not apply to them or shall apply only with such exceptions, modifications and adaptations as may be notified by the Government. However, the Central Government cannot exempt the Government Companies from the provision of Ss.619 and 619-A which specifically deal with such companies.

Section 619 provides that the auditor of a Government Company shall be appointed or re-appointed by the Central Government on the advice of the Comptroller and Auditor-General of India. The ceilings on the number of audits to be undertaken by an auditor under s.244 are equally applicable to audit of Government Companies. The Comptroller and Auditor General of India have power to direct the manner in which the accounts are to be audited and to give instructions to the auditor in regard to any matted relating the performance of his functions. He is also empowered to get a supplementary test audit of accounts conducted by persons authorized by him. The auditor of the Government Company has to submit a copy of his audit report to the C.&A.G.I. who has the right to comment upon, or supplement the audit report in such manner as he think fit. Such comments or supplementary audit report must be placed before the annual general meeting of the company at the same time and in the same manner as the auditor’s report.

Section 619-A provides that the Central Government must place before both House of Parliament an annual report on the working and affairs of each Government Company to be prepared within three months of its annual general meetings, together with a copy of the audit report and any comments upon or supplement to, such audit report, made by the C.& A.G.I. Where a State Government is a participant in a Government Company, this report has, likewise, to be placed before the state Legislature.

Section 619-B provides that the provisions of s.619 as stated above also apply to a company in which the Central Government or any State Government or any Government Corporation hold either singly or jointly not less than 51% of the paid-up share capital.