CORPORATION

 

CORPORATION

The word ‘Corporation’ immediately makes one think of Municipal Corporation or a Business Corporation. And, of course, not to miss out on BBC - British Broadcasting Corporation which may be neither of the two.

A corporation is an organization, authorized by the state, to act as a single entity and recognized, in law for certain purposes. The idea of an independent identity of the entity is to give it longevity, transparency, accountability and legality whether by way of legal process of establishing it or by registering such entity with an appropriate authority.

Early corporations and companies were incorporated through The Charter of the monarch, King or Queen. Like British East India Company in 1600 and British Broadcasting Corporation first as British Broadcasting Company in 1922 and later as British Broadcasting Corporation in 1927. Magna Carta was the first Royal Charter in 1215.Royal Charter continues to be used to establish organisations such as municipalities, universities and societies. Some of the earliest universities in Europe and America were established through Charters.

In the USA the word corporation by default implies business entity.

The Greater Chennai Corporation, previously Madras Corporation, established in 1688, is the oldest surviving municipal corporation in India and the second oldest surviving corporation in the world. Brihanmumbai Municipal Corporation, Bombay Municipal Corporation earlier, is the richest municipal corporation in India. Municipal Corporations in India, also called Urban Local Bodies, represent the third level of governance. More recently the municipal corporations have issued Bonds, listed in the stock market, in order to enhance their source of finance.

Post-Independence three Development Financial Institutions, namely, Industrial Finance Corporation of India (IFCI) Industrial Credit & Investment Corporation of India (ICICI) and Industrial Development Bank of India (IDBI) were set-up in 1948, 1955 & 1964 respectively. IFCI and IDBI were set up by acts of Parliament of India whereas ICICI was registered as a Public Limited Company under Companies Act.  ICICI and IDBI, through the process of reverse merger became ICICI Bank and IDBI Bank respectively. Industrial Finance Corporation of India (IFCI), on the other hand, became a Non-Banking Finance Company and the name changed to IFCI Ltd.

In the private sector Housing Development Finance Corporation (HDFC) was incorporated as a Public Limited Company in 1977 after ICICI was formed as a company in 1955.

Indian Tourism Development Corporation was set-up in 1966 in the public sector. Number of other public sector corporations were set-up in 1980s by various government departments as companies with an intention to raise money from the market. This included Power Finance Corporation in 1986, Indian Railway Finance Corporation in 1986, Container Corporation of India in 1988 and Tourism Finance Corporation of India in 1989, Indian Railway Catering & Tourism Corporation was set-up in 1999.All these companies were registered under Companies Act 1956.

With the passage of time, use of the word “Corporation”, whether in the context of governance or in the case of corporate world, has continuously declined during the last two or three decades in India. Urban Local Bodies derive their names from vernacular now and company is a word most commonly used in India as it enables such entities to raise the funds from market.