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 Form 2 Business Studies: Forms of business units lessons

Meaning and characteristics of public or state corporations

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Answer Text:
PUBLIC CORPORATIONS (STATE CORPORATIONS)
-These are organizations formed by and/or controlled by the government (the government has a controlling interest). This means that the government owns more than 50% shares in the corporation. Where the government has full
ownership, the organization is known as a parastatal.
-They are formed to perform a specific function on behalf of the government.
Examples:
-Kenya Railways corporation- provides railway transport
-Telkom Kenya-provides telecommunication services
-Postal corporation of Kenya
Characteristics/features of public corporations
-They are formed by the government under the existing laws i.e formed by an act of parliament
-Initial capital is provided by the government
-They are jointly owned by the government and members of public/private investors
-They are set up to perform certain specific functions on behalf of the government
-They are managed by a board of directors appointed by the government or appointed by the government and the joint owners
-They have an entity of their own and can own property, enter contracts, sue and be sued
-They have limited liability
-Some operate without a profit motive while others have a profit motive


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