Did you know that Government Companies in India are bound by law to submit detailed annual reports to Parliament or State Legislatures?
Whether it’s a PSU giant like ONGC or a state-owned utility, these companies must ensure public accountability and transparency in operations.
📊 The Companies Act, 2013, through Sections 394 & 395, clearly outlines how annual reports, audit findings, and comments by the CAG of India must be presented — even if the company is under liquidation!
💡 If you’re in corporate governance, public finance, or compliance, understanding this framework is essential.
Understanding Government Companies & Their Reporting Duties under Sections 394 & 395 of the Companies Act, 2013
In India’s dynamic public sector, Government Companies play a pivotal role across infrastructure, energy, finance, manufacturing, and services. But how are these entities held accountable? The Companies Act, 2013, through Sections 394 and 395, ensures a structured mechanism for transparency and public reporting.
🔎 What is a Government Company?
As per Section 2(45) of the Companies Act, 2013:
A Government Company is any company in which not less than 51% of the paid-up share capital is held by:
The Central Government, or
Any State Government(s), or
Jointly by the Central and one or more State Governments.
This includes subsidiaries of such companies as well.
🏢 Examples of Government Companies (India)
Here are some well-known Government Companies across sectors:
| Sector | Example |
|---|---|
| Energy & Oil | ONGC, Indian Oil Corporation (IOC) |
| Transport | Air India Asset Holding Ltd., Container Corporation of India |
| Finance & Banking | REC Limited, India Infrastructure Finance Company |
| Steel & Manufacturing | Steel Authority of India Limited (SAIL) |
| Power & Utilities | NTPC, Power Grid Corporation |
| Communication | Bharat Sanchar Nigam Ltd. (BSNL) |
These companies serve as the backbone of India’s strategic and developmental infrastructure.
📘 Section 394: When Central Government is a Shareholder
If the Central Government is a shareholder in a Government company, then:
✅ It must ensure an Annual Report is:
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Prepared within 3 months of the AGM.
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Includes the Audit Report and Comments by the Comptroller and Auditor-General of India (CAG).
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Laid before both Houses of Parliament.
🏛 Section 395: When Only State Government(s) Are Shareholders
If the Central Government is not a member, but one or more State Governments are:
✅ The concerned State Government(s) must:
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Prepare the Annual Report in the same 3-month timeframe.
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Lay it before the State Legislature(s) with the CAG’s audit report and comments.
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This applies even if the company is under liquidation.
🔍 Why It Matters
These provisions:
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Uphold transparency in public spending,
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Ensure audit-based accountability,
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Strengthen public trust in government enterprises,
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Keep both Parliament and State Legislatures informed.
📣 Final Thought
Whether you’re a policy professional, public sector executive, or compliance officer, understanding what qualifies as a Government Company and how Sections 394 and 395 ensure transparency is essential in today’s regulatory ecosystem.
✅ Accountability is not optional—it’s embedded in the law.
Let’s connect if you’re working on compliance, governance, or need clarity on BIS, CSR, or MCA frameworks for your organization.
