Question 3
-
Differentiate between public enterprises and public companies under the following headings:
- formation;
- ownership;
- purpose;
- management;
- sources of fund.
Observation
This question was attempted by many candidates. However some of them did not handled it well. Whereas the candidates were expected to differentiate under the listed heading, the pairing in most cases did not match. Some who did not answer in tabular form did not use conjunctions such as while to show the difference. This resulted in low scores for these candidates.
Also, some candidates mixed up public enterprises as private limited liability company and compared it with public companies under the listed heading.
The expected responses are.
3. Differences between public enterprises and public companies
No. |
Heading |
Public enterprise |
Public company |
1. |
Formation |
It is formed by an Act of parliament |
It is incorporated by the promoters according to the company’s act. |
2. |
Ownership |
It is owned by government/ general public |
It is owned by the shareholders |
3. |
Purpose |
To provide essential services to the general public |
To make profit for the shareholders |
4 |
Management |
The government appoints a Board of directors. |
A Board of directors is elected by shareholders |
5 |
Sources of funds |
Provided by government through subventions, subsidies or grants/ tax payers money. |
It is provided through sales of shares, debentures and credit facilities. |