Merits of a Statutory Corporation

Introduction 

All of these patterns are for profitable growth but there are also non-profit corporations and structures. Let’s see the statutory corporations meaning.

Statutory corporations are general sector units that gave rise to presence by a special act of the Parliament.  The Act interprets its strengths and purposes, rules and regulations governing its employees and its relationship with a government department. 

A statutory corporation appreciates sovereignty in the case of finance and is answerable to the specific legislature under which it was established. 

Features of Statutory Corporation

The features of statutory corporations are as given below:

1. Corporate core-

Statutory corporations are corporate cores. The law creates this as an artificial person and they are regarded as a legitimate entity. These corporations are governed by a council of governors who are authorized by the government. This type of corporation has an ample amount of right to step into contracts and is eligible to do any type of business under the company name. 

2. State-controlled –

The state fully owned the statutory corporation. The government gives full support by consenting to the capital as a whole.

3. Autonomous Employee System –

The employees of the statutory corporations are not considered government subordinates although being controlled by the government. The employees are enrolled and paid as per the rules laid down by the corporation. 

4. Financial Autonomy –

Statutory corporations have financial autonomy, i.e., financial independence or stability. They are not governed under any means of accounting, audit and budget. Nevertheless, in moments of need, the statutory operation can rent money from the government. 

5. Responsible to the legislature –

The statutory corporations acknowledge the freedom in case of internal administration and running of the operations of the corporation, but are responsible to the state or government legislature that developed it.

Merits of a statutory corporation

The merits of a statutory corporation are as follows – 

1. Expert management –

Statutory corporations are governed by managers who are well professional in their respective fields. This reflects professionalism in the management of statutory corporations.

2. Sovereignty in Administration –

Statutory corporations acknowledge sovereignty in the administration of the corporation. 

3. Quick decision making –

Statutory corporations possess considerably limited file work and formalities as described in other forms of organisations which result in quick decision making.

4. Efficient staff – 

The employees of the statutory corporation are given fair wages, facilities and adequate working conditions along with developmental strategies. 

5. Alleviate raising capital –

As these corporations are occupied by the government, fundraising is susceptible as they can bring up funds by issuing contracts at low-interest rates.

Demerits of a Statutory Corporation 

The demerits of a statutory corporation are as follows –

1. Autonomy only on paper-

Statutory corporations are autonomous but the working of these corporations is hindered by interference from ministers, and political parties that have consequences on their autonomy.

2. Rigid laws –

The statutory corporation acknowledges the flexibility in procedures, but most have rigid rules and regulations which make changing any of the existing rules a time-consuming procedure. Any modification that mandates to be brought about to the existing set of rules necessities to be introduced in parliament which creates it tedious.

3. Lacks initiative –

These corporations lack any profit objective and accordingly the workers and administration are not enthusiastic in taking any initiative for developing profit.

4. Conflict of interest among co-members –

The members of council managers are appointed by the administration and there may prevail differences of viewpoint among managers which results in a conflict of interests among them.

Conclusion 

So, we can conclude that statutory corporations are general sectors that give rise to the presence of the special act of the parliament. It was formed under a statue of the Legislature. It is solely responsible to answer under the Special legislature of which it formed and maintains sovereignty. They have financial stability or independence and are not governed under any means of an audit, budget or accounting. They have the option of lending money directly from the government in a very crucial stage. It’s a very well maintained corporation where the primary governing bodies are managers who are professionals in their respective fields. They have relatively less fieldwork and formalities as compared to other forms of organisation which result in quick reasoning. Hence, they forecast strength, purposes, capability and follow greatly the rules and regulations for its working along with morales with the Legislature.