What is Public Corporations Definition?
What's a public corporations definition? A public corporation is a legal entity that is separate and distinct from its owners.3 min read
What's a public corporations definition? A public corporation is a legal entity that is separate and distinct from its owners. Public corporations enjoy most of the responsibilities and rights that an individual possesses. For example, a corporation has the right to loan and borrow money, enter into contracts, sue and be sued, own assets, hire employees, and pay taxes. A public corporation is often referred to as a "legal person."
Public Corporation Law and Legal Definition
Public corporate law is related to contract and commercial law and deals with the operations and formation of a corporation. A corporation is a separate legal entity that's created through the state laws in which it was incorporated. It's treated as a legal person that has the ability to sue and be sued, definitively distinct from its shareholders.
Corporations are taxed at a lower rate than individuals. A corporation has a perpetual life, meaning the deaths of shareholders and officials don't change the corporate structure. State laws regulate the organization, creation, and dissolution of corporations. About half of states follow the Model Business Corporation Act.
Registration laws require all corporations that incorporate in foreign states to request permission to do in-state business. In 1933, Congress passed the Securities Act, which regulates how securities are issued and traded.
Corporations need to follow specific federal licensing and regulation guidelines based on the industry in which they do business. For example, the public transportation and communication sectors are highly controlled and regulated.
A public purpose corporation is a company that's been formed and chartered by the state to fulfill a government function. It may also be referred to as a public benefit corporation. Some states will define a public purpose corporation as a charitable corporation or a nonprofit, even if it's created with private funds.
Public Purpose Corporation Function
A public purpose corporation is formed to help society. In fact, many are used in highly regulated industries, such as public transportation and broadcasting. Some examples of public purpose corporations that were formed by state governments include:
- Senior centers
- Aviation and port authorities
Some examples of public purpose corporations formed by the federal government include:
- United States Postal Service
- Corporation for Public Broadcasting
Public Authority Public Purpose Corporation
A public authority is another category of public purpose corporation. It's formed by a governing body that will use it to assist the public. A public authority will tend to have increased bureaucratic control and will often regulate federal and state infrastructure. Upon being formed, a public authority is operated by the government as an independent legal entity and is usually protected from political pressure.
Some examples of public authorities include:
- Medical centers
- Affordable housing
- Highway and bridge management
Quasi-Public Purpose Corporation
A quasi-public purpose corporation is a variation of the public purpose corporation. Although similar, a quasi-public corporation is formed with the intention of benefiting the public. The main difference between the two is that a quasi-public purpose corporation is operated privately. The private or independent owners of the business will usually benefit from receiving some amount of government funding.
The stock of a quasi-public purpose corporation may be sold on the open market. The purpose of the business is not to generate a profit, but instead to carry out original purpose. For example, Sallie Mae is a type of quasi-public purpose corporation. Sallie Mae's intention is not to make a profit, since it was created to assist in the advancement of student loan improvement.
Difference Between Publicly Held Corporation and Public Purpose Corporation
It's important to remember that a public purpose corporation should not be mistaken with a publicly traded or publicly held corporation, where shares are traded in the off-exchange trading market or on a securities exchange. Publicly held businesses may refer to a large variety of corporations, but most importantly, they don't require that any public benefit or purpose is involved.
What Is an Indian Public Corporation?
In India, a public corporation is a business that's created by the legislature or an act of parliament, and its name is notified in the official gazette of the state or central government. There are many businesses that were created in India by the government in the form of a service organization, including:
- Air India
- Unit Trust of India
- State Bank of India
- Food Corporation of India
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