Category: 

What Is a Government Corporation?

Article Details
  • Written By: Matthew F.
  • Edited By: Bronwyn Harris
  • Last Modified Date: 25 September 2014
  • Copyright Protected:
    2003-2014
    Conjecture Corporation
  • Print this Article
External Resources
Free Widgets for your Site/Blog
The world’s first dog ate reindeer and horse meat.  more...

October 30 ,  1938 :  Orson Welles' "War of the Worlds" was broadcast on radio, causing a panic among some   more...

A government corporation is either fully or partially owned by a nation’s government. In most cases, the top official in the country will designate at least some of the directors who are on the government corporations’ board. If the national government sets out the purposes, powers and obligations of a government corporations, they will specify incorporators.

A government corporation is typically labeled as wholly owned, mixed-ownership or private corporations. Wholly owned corporations will garner 100 percent of the equity for the federal government. In addition to all of the equity, the corporation will earn 100 percent of the votes on each company’s board.

Mixed-ownership corporations are those in which the federal government owns some or none of the equity in the company. The charter of each company means the president or prime minister will appoint at least a small portion of the directors. The federal government will hold no stock in private corporations. They may however have the right to select several members to the board of directors for these corporations.

A government corporation is typically created for each corporation to be more efficient in regards to each company’s specific goal. The federal government also names people to the board of directors so the government will be able to have a say in how each company will be run.

Ad

The United States Postal Service (USPS), Environmental Protection Agency (EPA), and Federal Deposit Insurance Corporation (FDIC) are all government corporations in one form or another. The USPS and Federal Deposit Insurance Corporation are owned by the government, but have the highest level of political independence of government corporations. The Environmental Protection Agency is a similar corporation, but does not garner the political independence of the USPS or Federal Deposit Insurance Corporation.

Since 2008, some of the newest government corporations, due to the economic downturn, are Citigroup, American International Group, General Motors and Chrysler. The federal government viewed these companies as too big to fail and provided a financial bailout to each of these companies. The United States government viewed these corporations as vital to the national economy. As a result, the government acquired these companies but did not actually form these corporations.

Across the world, most countries have at least one instance of a government corporation. Since 1949, everything in China became a fully owned government operation. In the last 20 years, some smaller enterprises became privatized. Canada utilizes a government corporation under the crown corporation meaning it is owned by the executive branch of the government. The Canadian Broadcasting Corporation is one of the largest and most well-known companies owned by the Canadian government.

Ad

More from Wisegeek

You might also Like

Discuss this Article

wavy58
Post 4

@orangey03 – One good thing about working for a government corporation like the Postal Service is the number of holidays you get per year. My uncle works there, and if a holiday gets any sort of mention on a calendar, they get to take it off, it seems.

I understand taking off Christmas and Thanksgiving, but President's Day and Columbus Day are a bit obscure to me. I get why the federal government deems them important, but most other employees don't get these days off. Also, it irks me that I don't get my mail delivered on these days.

orangey03
Post 3

Everyone is always talking about how great government jobs are, but they are very hard to get. In order to work for the United States Postal Service, you have to pass the civil service exam, and not a whole lot of people manage to do this.

I attended a conference that touched on some of the types of questions that would be asked on the civil service exam. Some of them I remembered the answers to, because I learned them in high school history class, but many involved complicated math problems and things that ordinary people just don't know off the top of their heads.

Oceana
Post 2

@lighth0se33 – I have faith that the big car companies bailed out by the government will see an upturn in business and eventually thrive once more. The government realized that the whole world was in trouble at the time they bought them out, and they were probably going by past records when measuring the success of these companies in the long-term.

When things are looking up, the companies purchased by the government are very likely to do as well as they have done in the past. When consumer confidence increases, there is no reason for well-established businesses like these not to flourish.

lighth0se33
Post 1

Wow, I didn't realize that the federal government actually owns Chrysler and General Motors now! I just thought that they bailed them out to spare jobs and give them another chance to be successful. They basically had to sell themselves to the government in order to survive!

I do find it odd that the government views these companies as too big to fail. Obviously, they were failing at the time they received the financial bailout, so it is possible.

Maybe they think that with their continuous monetary help, the companies cannot fail. The government may find itself investing way more than it earns in this case, though. A vehicle is a huge purchase, and in times of economic stress, people don't make these types of purchases often.

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email