Para 2.5.2 — MSO (Audit)
Original Rule Text
2.5.2 Government companies are governed by the Companies Act, 1956, and by all legislation applicable to limited liability companies in general. The term “Government Company” includes a subsidiary of a Government company.
- Government Companies
What This Means
Government companies are defined and governed by the Companies Act, 1956, and are subject to all laws that apply to limited liability companies in general. The definition of 'Government Company' is broad enough to include not just companies directly owned by the government but also subsidiaries of government companies.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Government companies are governed by the Companies Act, 1956
- 2All laws applicable to limited liability companies also apply to government companies
- 3The definition includes subsidiaries of government companies
- 4The legal framework treats government companies as corporate entities with additional accountability
Practical Example
A central government company sets up a wholly-owned subsidiary to handle its export operations. Even though the subsidiary's shares are held by the parent PSU and not directly by the government, it is still classified as a government company because it is a subsidiary of a government company. Therefore, the subsidiary is also subject to CAG audit and the same regulatory framework.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Does a subsidiary of a government company automatically become a government company?▼
Are government companies subject to private sector company laws too?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.