(A) Meaning:

1. A Government Company is one in which atleast 51% of its paid up capital is held by the Central Government and / or the State Government. 

2. State Trading Corporation (STC), Steel Authority of India (SAIL), Bharat Heavy Electricals Ltd (BHEL) etc. are some of the examples of Government Companies. 

3. These companies are registered under the Indian Companies Act, 2013 and its working is governed by the rules and regulations of the act.

4. Government Companies are established for purely business purpose and to complete with the private sector. The shares of the company are purchased in the name of the President of India. 

5. Government Companies may be registered as public or private limited companies.

(B) Features of Government Company: 

The Government Company may be registered as public or private limited companies. These companies are established for purely business purpose and to compete with the private sector.

Following are the features of Government Company:

(i) Free from Procedural Controls: The Government companies have a right to formulate their independent policies and even make necessary changes in them. It enjoys freedom from budgetary, accounting and audit controls which are applicable to Government undertakings.

(ii) Majority of Government Directors : All or majority of directors of such companies are appointed by the Government from different fields. They may be experts from banking sector, insurance sector, who manage the day to day business affairs. 

(iii) Public Accountability : The annual accounts of the company are tabled before Parliament or State Legislature for review and discussion. Thus, Government Company is accountable and answerable to the Parliament or State Legislature through the concerned Minister. 

(iv) Registration under the Companies Act: The Government Company is registered under the Companies Act, 2013 and its formation, working, management and winding up a business is governed by provisions of- the Act. Government has power to modify or change certain provisions laid down in the Act.

(v) Own Staff: The employees are appointed as per the rules and regulations set by the company. Its employees are not governed by respective Government. 

(vi) Promotes Social Welfare : Government Companies aims to optimise national and natural resources such as land, water, electricity, etc. It produces arms, ammunition and other defence equipments. It also brings about balanced regional development and leads to equality of income. 

(vii) Objective : It operates on commercial principles and as such its aim is to make profit.

(viii) Separate Legal Entity : A Government Company is a corporate body created under the Companies Act. It has all features of a company such as legal entity, common seal, limited liability, etc. It can enter into contracts and acquire property in its own name. 

(ix) Exemptions : Government Company is exempted from budget, accounting and audit laws applicable to government departments. Its accounts are audited by the Government Auditor. The Government has a right to exempt the company from any provisions of Companies Act which may come in its way of providing welfare services to the public at large. 

(ix) Suitability : Government Companies are suitable for conducting manufacturing and marketing activities.