Government company means any company in which at least 51% of the paid up share capital is held by the Central or State Government or partly by Central or State government. The government companies are governed and ruled by the provisions of Companies Act, 1956 like any other registered company.
For example, Steel Authority of India, State Trading Corporations, Hindustan Machine Tools, etc.
The government company is a suitable form of organisation where
(i) Government wants to control a company in the private sector without nationalisation.
(ii) Government wants to go for a collaboration with private enterprise.
(iii) The projects require government planning and funds.
(iv) The government wishes to promote and develop a field of economic activities in the public sector.