Classification of Public Corporations

In one line

Public corporations are grouped by what they do, and the grouping matters because the more commercial the function, the less the law treats the body as an arm of the State.

In the words a student can write in an exam: public corporations may be classified by function into commercial or industrial corporations, developmental or promotional corporations, financial corporations, social service corporations and regulatory corporations; by the manner of their creation into statutory corporations, government companies and registered societies; and by the level of government to which they belong into central, State and joint corporations. The classification is not merely descriptive: whether a body is an authority within Article 12, and therefore subject to the fundamental rights and to the writ jurisdiction, depends on the degree of government control over it rather than on the label it carries.

Classification by function

This is the classification the syllabus asks for.

1. Commercial or industrial corporations

They produce goods or provide services for sale, and are expected to run at a profit or at least to cover their costs. Transport undertakings, power generation companies, steel and mining undertakings and manufacturing enterprises fall here.

Legal features. They contract in the ordinary way, employ under contracts of service, and are liable in tort like a private employer, since running a business is not a sovereign function: [Sovereign and Non-Sovereign Functions].

2. Developmental or promotional corporations

Their object is to promote an activity rather than to profit from it: industrial development corporations, tourism development corporations, small industries development bodies and agricultural marketing boards.

Legal features. They give assistance, subsidy, land or finance, and their decisions on whom to assist are administrative decisions subject to Article 14 and to the review grounds in [Grounds of Judicial Review: Abuse of Discretion].

3. Financial corporations

Banks, insurance corporations, term lending institutions and State finance corporations. They handle public money and are usually the most heavily regulated.

Legal features. They contract commercially, but their lending and recovery decisions affect citizens directly and attract fairness obligations.

4. Social service corporations

Their object is welfare rather than commerce: housing boards, water supply and sewerage boards, health and education bodies, and welfare corporations for particular groups.

Legal features. They are the closest to the State in substance, they allocate scarce benefits, and their allotment decisions are the classic subject of administrative law litigation about arbitrariness and legitimate expectation.

5. Regulatory corporations and commissions

They regulate an industry rather than participate in it: electricity regulatory commissions, telecom and securities regulators, and similar bodies.

Legal features. They exercise all three functions discussed in [Classification of Administrative Functions]: they make regulations, which is legislative; they adjudicate disputes and grant or revoke licences, which is quasi-judicial; and they administer. They must therefore observe natural justice in the adjudicatory part and the delegated legislation rules in the rule making part.