Public Corporation and Private Corporation:
The idea of creating Public Corporations was borrowed from private business corporations which had been in operation for a very long time. When it was felt essential that the state should abandon pure laisses faire and undertake economic, business, commercial, and industrial functions, it was natural for it to be influenced by the working of private corporations or companies which were already doing this work. However, since it was to be work done by the government of the state, the decision was made to create public corporations enjoying the freedom of enterprise and yet remaining responsible to the government. Naturally, therefore, a public corporation is like a private corporation with some important differences.
The most major difference between a Public Corporation and a Private Corporation is that the latter is owned by the private shareholders whereas public corporations are owned by the government. In a private corporation, money is invested by the shareholders and individuals, and the management is done by the Board of Directors. The Board is elected by the shareholders and it is the responsibility of the Board to manage the corporation effectively. In the day-to-day administration of the corporation, the Board of Directors has a large measure of freedom.
Public Corporations are owned and created by the government. Each public corporation works according to the law laid down at the time of its creation. It comes into being with a fund created and allocated by the legislature of the state. It enjoys financial autonomy and a large measure of freedom in its internal working. Its administration is run by a board of directors, who are appointed and removable by the government. The chairman of the corporation is also appointed by the government. The accounts of public corporations are subject to government audits. They are responsible before the government for all their work.
Hence, whereas a private corporation is a legal body created and got registered by private citizens, a public corporation is a government-owned legal corporation enjoying internal autonomy and engaged in a business or commercial or industrial enterprise.