A government-owned corporation, state-owned enterprise or government business enterprise is a legal entity created by a government A government is the body within an organization that has the authority to make and enforce rules, laws and regulations, control and direct the actions or behavior of the individuals within the organization and deal with everyday administrative issues to undertake commercial Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer. It comprises the trading of something of economic value such as goods, services, information or money between two or more entities. Commerce functions as the central mechanism which drives capitalism and certain other or business A business is a legally recognized organization designed to provide goods and/or services to consumers. Businesses are predominant in capitalist economies, most being privately owned and formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main activities on behalf of an owner government. There is no standard definition of a government-owned corporation (GOC) or state-owned enterprise (SOE), although the two terms can be used inter-changeably. The defining characteristics are that they have a distinct legal form and they are established to operate in commercial affairs. While they may also have public policy objectives, GOCs should be differentiated from other forms of government corporation or entity established to pursue purely non-financial objectives that have no need or goal of satisfying the shareholders with return on their investment through price increase or dividends Dividends are payments made by a corporation to its shareholders. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be paid to the shareholders as a dividend. Many corporations retain a portion of.

GOCs can be fully owned or partially owned by Government. As a definitional issue, it is difficult to determine categorically what level of state ownership would qualify an entity to be considered as "state-owned", since governments can also own regular stock In business and finance, a share of stock means a share of ownership in a corporation (company). In the plural, stocks is often used as a synonym for shares especially in the United States, but it is less commonly used that way outside of North America, without implying any special interference. As an example, the Chinese Investment Corporation agreed in 2007 to acquire a 9.9% interest in the global investment bank Morgan Stanley Morgan Stanley is a global financial services provider headquartered in New York City, New York, United States. It serves a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 33 countries around the world with 600 offices, with an approximate employee workforce of 45,000. The, but it is unlikely that this would qualify the latter as a government-owned corporation.

The term government-linked company (GLC) is sometimes used to refer to corporate entities A corporation is a legal entity separate from the persons that own it. In British tradition it is the term designating a body corporate, where it can be either a corporation sole or a corporation aggregate (involving more persons). In American and, increasingly, international usage, the term denotes a body corporate formed to conduct business, and that may be private or public (listed on a stock exchange) where an existing government A government is the body within an organization that has the authority to make and enforce rules, laws and regulations, control and direct the actions or behavior of the individuals within the organization and deal with everyday administrative issues owns a stake using a holding company A holding company is a company that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself, rather its only purpose is owning shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different. There are two main definitions of GLCs are dependent on the proportion of the corporate entity a government owns. One definition purports that a company is classified as a GLC if a government owns an effective controlling interest (>50%), while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC.

A quasi-governmental organization, corporation, business, or agency (parastatal) is an entity that is treated by national laws and regulations to be under the guidance of the government, but also separate and autonomous from the government. While the entity may receive some revenue from charging customers for its services, these organizations are often partially or majorly funded by the government. They are usually considered highly important to smooth running of society, and are sometimes propped up with cash infusions in times of crisis to help surmount situations that would bankrupt a normal privately-owned business. They may also possess law-enforcement authority, usually related to their functions.

By region

Europe

In Western Europe Western Europe refers to the countries generally in the westernmost half of Europe, but the definition is complex and carries political connotations. As a result, geographically eastern countries that steered clear of Soviet influence during the Cold War are usually included, while Western members of the former Eastern Bloc (Czech Republic, Poland) there was a massive nationalization Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the public ownership of a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being state operated or owned by the state. The opposite of throughout the 1900s, especially after World War II World War II, or the Second World War , was a global military conflict which involved a majority of the world's nations, including all of the great powers, organized into two opposing military alliances: the Allies and the Axis. The war involved the mobilization of over 100 million military personnel, making it the most widespread war in history to ensure Government control over natural monopolies In economics, a natural monopoly occurs when, due to the economies of scale of a particular industry, the maximum efficiency of production and distribution is realized through a single supplier and to some extent industry There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction, and manufacturing; the tertiary sector, which deals with services and distribution of manufactured goods; and the quaternary sector, a relatively new type. Typical sectors included telecommunications, power The electrical power industry provides the production and delivery of electrical power , often known as power, or electricity, in sufficient quantities to areas that need electricity through a grid. Many households and businesses need access to electricity, especially in developed nations, the demand being scarcer in developing nations. Demand for, petroleum Petroleum or crude oil is a naturally occurring, flammable liquid found in rock formations in the Earth consisting of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds, railways A railway company or railroad company is an entity that operates a railroad track and/or trains. Such a company can either be private or public. Some railway companies operate both the trains and the track, while particularly in Europe ownership of track and train operation is separated in different companies, airports An airport is a location where aircraft such as aeroplanes, helicopters, and blimps take off and land. Aircraft may also be stored or maintained at an airport. An airport consists of at least one surface such as a runway, a helipad, or water for takeoffs and landings, and can often includes buildings such as hangars and terminal buildings, airlines An airline provides air transport services for passengers or freight, generally with a recognized operating certificate or license. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit, public transport Public transport comprises passenger transportation services which are available for use by the general public, as opposed to modes for private use such as automobiles or vehicles for hire. Some services are free though most charge some sort of fare, health care Health care, or healthcare, refers to the treatment and management of illness, and the preservation of health through services offered by the medical, dental, pharmaceutical, clinical laboratory sciences , nursing, and allied health professions. Health care embraces all the goods and services designed to promote health, including “preventive,, postal services Mail, or post, is a method for transmitting information and tangible objects, wherein written documents, typically enclosed in envelopes and also small packages are delivered to destinations around the world. Anything sent through the postal system is called mail or post and sometimes banks A bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money. Many other financial activities were allowed over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as Germany, banks have. Many large industrial corporations were also nationalized or created as Government corporations, including among many British Steel British Steel was a major British steel producer. It originated as a nationalised industry, the British Steel Corporation , formed in 1967. This was converted to a limited company, British Steel PLC, and privatised in 1988. It was once a constituent of the FTSE 100 Index but following mergers, the business is now owned by Corus, a Tata Steel, Statoil Statoil ASA was a Norwegian petroleum company established in 1972, now part of StatoilHydro. The brand Statoil is retained as a chain of fuel stations owned by StatoilHydro. Statoil was the largest petroleum company in the Nordic countries and Norway's largest company, employing over 25,000 people. While Statoil was listed on both the Oslo Stock and Irish Sugar. Starting in the late 1970s and accelerating through the 1980s and 1990s many of these corporations were privatized Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector (business). In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law, though many still remain wholly or partially owned by the respective governments.

A state-run corporation needs to be distinguished from an ordinary limited liability corporation owned by the state. For example, in Finland, state-run corporations (liikelaitos) are governed by a separate act. Even though responsible for their own finances, they cannot be declared bankrupt Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor (a "; the state answers for the liabilities. Conversely, the state can directly fund unprofitable business. Stocks of the corporation are not sold and loans have to be government-approved, as they are government liabilities. In contrast, the state also owns controlling interest in ordinary limited liability corporations.

In Russia Russia (pronounced /ˈrʌʃə/ ; Russian: Россия, pronounced [rʌˈsʲijə]), officially known as both Russia and the Russian Federation(Russian: Российская Федерация​ (help·info), Rossiyskaya Federatsiya), is a country in northern Eurasia (Europe and Asia together). It is a semi-presidential republic, comprising 83 and some other post-Soviet states The post-Soviet states, also commonly known as the former Soviet Union or former Soviet republics, are the 15 independent nations that split off from the Union of Soviet Socialist Republics in its breakup in December 1991. Excluding the Baltic states (which were independent before World War II and simply restored the pre-war diplomatic links after, unitary enterprises are commercial organizations that have no ownership rights to the assets they uses in their operations. This form is possible only for state and municipal enterprises, operating with state or municipal property, respectively. The owners of the property of a unitary enterprise have no responsibility for its operation and vice versa.

The assets of unitary enterprises belong to the Federal government, a Russian region, or a municipality. An unitary enterprise holds assets under the right of economic management (for both state and municipal unitary enterprises) or operative management (for state unitary enterprises only), and that such assets may not be distributed among the participants, nor otherwise divided. An unitary enterprise is independent in economic issues and obliged only to give its profits to the state. Unitary enterprises would have no right to set up subsidiaries, but, with the owner's consent, can open branches and representation offices.

An example of such an enterprise is Mashpriborintorg.

By contrast, a state corporation (Russian Russian is the most geographically widespread language of Eurasia, the most widely spoken of the Slavic languages, and the largest native language in Europe. Russian belongs to the family of Indo-European languages and is one of three living members of the East Slavic languages, the others being Belarusian and Ukrainian (and possibly Rusyn,: Государственная корпорация) is a non-profit organization A nonprofit organization is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples of NPOs include charities (i.e. charitable organizations) , trade unions, and public arts organizations. Most governments and government agencies meet this definition, but in which manages its assets as described in its charter. State Corporations are not obliged to submit to public authorities documents accounting for activities (except for a number of documents submitted to the Russian government) and, as a rule, are subordinate not to the government, but to the Russian president, and act to accomplish some important goal. Control of the Government is implemented on the basis of annual corporation, annual report on the audit opinion of accounting and financial reporting (accounting), as well as the conclusion of the auditing commission on the results of verification of financial (accounting) statements and other corporation documents. Any other federal government departments, organs of state power of subjects of the Russian Federation, the local governments have no right to interfere in the activities of the State corporation.

United States

The government-sponsored enterprises (GSEs) are a group of financial services Financial services refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are banks, credit card companies, insurance companies, consumer finance companies, stock brokerages, investment funds and some government sponsored corporations created by the United States Congress The United States Congress is the bicameral legislature of the federal government of the United States of America, consisting of two houses, the Senate and the House of Representatives. Both senators and representatives are chosen through direct election. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market The capital market is the market for securities, where companies and governments can raise longterm funds. It is a market in which money is lent for periods longer than a year. The capital market includes the stock market and the bond market. Financial regulators, such as the U.S. Securities and Exchange Commission , oversee the capital markets in more efficient and transparent. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors: agriculture Agriculture refers to the production of food and goods through farming and forestry. Agriculture was the key development that led to the rise of civilization, with the husbandry of domesticated animals and plants creating food surpluses that enabled the development of more densely populated and stratified societies. The study of agriculture is, home finance A mortgage is the transfer of an interest in property to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be and education.^{[citation needed]} Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks The Federal Home Loan Banks provide stable, on-demand, low-cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending. With their members, the FHLBank System represents the largest collective source of home mortgage and community credit in the United States. The in 1932; and it targeted education Education in its broadest sense is any act or experience that has a formative effect on the mind, character, or physical ability of an individual ; and in its technical sense education is the process by which society deliberately transmits its accumulated knowledge, values, and skills from one generation to another through institutions. Teachers when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage A mortgage is the transfer of an interest in property to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. Together, the three mortgage finance GSEs (Fannie Mae The Federal National Mortgage Association (NYSE: FNM), commonly known as Fannie Mae, is a stockholder-owned corporation chartered by Congress in 1968 as a government-sponsored enterprise (GSE), but founded in 1938 during the Great Depression. The corporation's purpose is to purchase and securitize mortgages in order to ensure that funds are, Freddie Mac The Federal Home Loan Mortgage Corporation (NYSE: FRE), known as Freddie Mac, is a government sponsored enterprise (GSE) of the United States federal government. Freddie Mac has its headquarters in the Tyson's Corner CDP in unincorporated Fairfax County, Virginia and the 12 Federal Home Loan Banks The Federal Home Loan Banks provide stable, on-demand, low-cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending. With their members, the FHLBank System represents the largest collective source of home mortgage and community credit in the United States. The) have several^[quantify]trillion dollars The dollar is the name of the official currency in several countries, including Australia, Canada, Hong Kong, New Zealand, the United States and Zimbabwe of on-balance sheet In financial accounting, a balance sheet or statement of financial position is a summary of a person's or organization's balances. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a snapshot of a company's financial condition. Of the four basic assets In business and accounting, assets are economic resources owned by business or company. Any property or object of value that one possesses, usually considered as applicable to the payment of one's debts is considered an asset. Simplistically stated, assets are things of value that can be readily converted into cash. The balance sheet of a firm.^{[citation needed]}. The federal government possesses warrants In finance, a warrant is a security that entitles the holder to buy stock of the company that issued it at a specified price, which is usually higher than the stock price at time of issue which, if exercised, would allow them to take a 79.9% ownership share in the companies. The federal government has not currently exercised these warrants.

Other corporations owned by the federal government include the National Railroad Passenger Corporation (which does business as Amtrak The National Railroad Passenger Corporation, doing business as Amtrak , is a government-owned corporation that was organized on May 1, 1971 to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "American" and "track"), the Tennessee Valley Authority The Tennessee Valley Authority is a federally owned corporation in the United States created by congressional charter in May 1933 to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee Valley, a region particularly impacted by the Great Depression. The TVA was envisioned, the Corporation for Public Broadcasting The Corporation for Public Broadcasting is a private non-profit corporation created by an act of the United States Congress and largely funded by the United States Federal Government to promote public broadcasting. Historically, 15% to 20% of the aggregate revenues of all public broadcasting stations have been funded from Federal sources,, FDIC The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass-Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. Funds in non-interest bearing transaction accounts are fully insured, with no limit,, Fannie Mae, Freddie Mac, and the United States Postal Service. Many states have government-owned businesses for operations as well (e.g. North Dakota Mill and Elevator or South Dakota Public Broadcasting). Generally speaking, a statute passed by a state legislature specifically sets up a government-owned company in order to undertake a specific public purpose with public funds or public property. Lotteries in the United States are also run by government corporations, such as the Georgia Lottery Corporation and many others.

People's Republic of China

After 1949, all business entities in China were created and owned by the government. In the late 1980s, the government began to reform the state-owned enterprise, and during the 1990s and 2000s, many mid-sized and small sized state-owned enterprises were privatized and went public. There are a number of different corporate forms which result in a mixture of public and private capital. In PRC terminology, a state-owned enterprise refers to a particular corporate form, which is increasingly being replaced by the listed company. State-owned enterprises are governed by both local governments and, in the central government, the national State-owned Assets Supervision and Administration Commission of the State Council.

Republic of China (Taiwan)

The founding father of the Republic of China, Sun Yat-sen, was heavily influenced by the economic ideas of Henry George, who believed that the rents extracted from natural monopolies or the usage of land belonged to the public. Dr. Sun argued for Georgism and emphasized the importance of a mixed economy, which he termed "The Principle of Minsheng" in his Three Principles of the People.

"The railroads, public utilities, canals, and forests should be nationalized, and all income from the land and mines should be in the hands of the State. With this money in hand, the State can therefore finance the social welfare programs."^[1]

Corporations such as CSBC Corporation, Taiwan, CPC Corporation, Taiwan and Aerospace Industrial Development Corporation are owned by the state in the Republic of China.

Commonwealth

In monarchical Commonwealth countries, particularly Canada, country-wide government corporations often use the style "crown corporation". Equivalent terms include "state-owned enterprises" and "crown entities" in New Zealand, and government business enterprise (GBE) in Australia. Examples of crown corporations include the Canadian Broadcasting Corporation, and Air Canada before it underwent privatisation. Cabinet ministers (Ministers of the Crown) often control the shares in such public corporations. Other counties in the Commonwealth alternatively may call these types of institutions under preferred term such as: statutory boards, statutory bodies, statutory agencies, statutory corporations, government agencies, or public bodies.

At the level of local government, territorial or other authorities may set up government corporations such as "local-authority trading enterprises" (LATEs). Many local authorities establish services such as water supply as separate corporations or as a business unit of the authority.

India

In India, public-sector undertaking (PSU) is a term used for a government-owned corporation (company in the public sector). The term is used to refer to companies in which the government (either the Union Government or state or territorial governments, or both) owned a majority (51 percent or more) of the company equity.

Japan

In Japan, Japan Post was reorganized into Japan Post Group in 2007 as a material step of the postal privatization. It is currently wholly owned by the government, but is planned to be sold into private ownership. Japan Railways Group (JR), Nippon Telegraph and Telephone (NTT) and Japan Tobacco (JT) were formerly owned by the government.

OPEC

In most OPEC countries, the governments prefer to own the oil companies operating on their soil. A notable example is the Saudi national oil company, Saudi Aramco, which the Saudi government bought in 1988 and changed its name from Arabian American Oil Company to Saudi Arabian Oil Company. The Saudi government also owns and operates Saudi Arabian Airlines, and owns 70% of SABIC, as well as many other companies. They are, however, being privatized gradually.

Uruguay

Uruguay had the first welfare state of Latin America under the presidency of José Batlle y Ordoñez in 1904. Government-owned corporations monopolize services such as electricity (UTE), land-line communications (Antel) and water (OSE). Antel competes with private corporations in the cell-phone lines and international telephony markets.^{[citation needed]} In 1992, under the presidency of Luis Alberto Lacalle, the government attempted to privatize all its companies, following the neoliberal Washington Consensus. However, a referendum won by 75% of the population kept the companies in the hands of the government. By the end of his term, president Lacalle alleged that he had achieved a successful modernisation of the companies, which had made them more efficient.

See also

• Nationalization
• Privatization
• Public company (public corporation)
• Public ownership
• Stock exchange
• Stock market
• Quango
• Crown corporations of Canada
• State-Owned Enterprises of New Zealand
• Statutory corporation
• Statutory Agency
• Government agency
• Public bodies
• Crown corporation
• Regulatory agency
• Public bodies
• Non-departmental public body
• Federal agency
• Statsforetak (Norwegian state enterprise)
• Public Sector Undertaking (Indian state enterprise)
• Volkseigener Betrieb (East German state enterprise)
• State inside a state

References

1. ^ Simei Qing "From Allies to Enemies", 19

Further reading

• The Public Firm with Managerial Incentives by Elmer G. Wiens.

Categories: Government-owned companies | Types of companies

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• Government-owned Company
• Government
• Private Company
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