Question

Statutory companies are those

• A. created through a special Act of the Parliament
• B. not governed by the Companies Act
• C. Governed by the Act which creates them
• D. all of these

Hint:

Think of examples like the RBI or LIC, both set up by their own special Acts.

Answer 1

The Correct Option is D

This question is about the standard business studies definition of a statutory company.

1. Created through a special Act of the Parliament: True. A statutory company, unlike a normal registered company, comes into existence when Parliament (or a state legislature) passes a specific Act to set it up, for example the Reserve Bank of India or the Life Insurance Corporation.
2. Not governed by the Companies Act: True as a general rule. Since a statutory company owes its existence to its own special Act, the general Companies Act does not govern its formation and working the way it governs an ordinary registered company, though some provisions of company law may still apply where its special Act allows.
3. Governed by the Act which creates them: True. The powers, objectives and working of a statutory company are laid down in the very Act of Parliament that creates it, and that Act, not a memorandum and articles of association, is its governing document.
4. All of these: Since each of the first three statements correctly describes a feature of a statutory company, the complete and accurate answer combines all three.

A statutory company is set up by a special Act and is governed by that very Act rather than the general Companies Act, so every one of the first three statements is a correct part of its definition.

Let's summarize:

• A statutory company is set up by a specific Act of Parliament, for example the RBI or LIC.
• Its working is governed by that special Act rather than the general Companies Act.

The correct answer is option (4), all of these.