Explain any five ways in which nationalised industries differ from public limited companies.

Answer Details

Nationalised industries (public corporations owned by the State) differ from public limited companies (privately owned joint-stock companies) in the following ways:

1. Ownership: A nationalised industry is owned by the government on behalf of the whole nation, while a public limited company is owned by private individual shareholders who have bought its shares.
2. Source of capital: A nationalised industry obtains its capital mainly from government funds, grants and loans, whereas a public limited company raises its capital by selling shares and debentures to the public.
3. Aim or motive: A nationalised industry is set up primarily to provide essential services to the public, not mainly to make profit, while a public limited company is established mainly to maximise profit for its shareholders.
4. Formation: A nationalised industry is created by a special Act of Parliament (a statute), while a public limited company is formed by registration under the Companies Act.
5. Control and management: A nationalised industry is controlled by a board appointed by the government and is answerable to a minister and to Parliament, whereas a public limited company is managed by a board of directors elected by the shareholders at the annual general meeting.
6. Distribution of profit: Any surplus made by a nationalised industry belongs to the government and may be used for public purposes, while the profit of a public limited company is shared among shareholders as dividends.