CAG, CVC may not cover PSUs if govt stake below 51%

New Delhi: State-run companies where the government brings down its stake below 51% may not come under the scrutiny of government vigilance agencies such as the Central Vigilance Commission and Comptroller and Auditor General.

Under Section 2(45) of the Companies Act, only those firms where the government has at least a 51% stake are considered to be state-owned, a senior government official said. In her budget on Friday, finance minister Nirmala Sitharaman announced the government’s intention to cut its stake below 51% in several companies on a case-to-case basis.

The official said the Department of Public Enterprises (DPE), which is the nodal agency for all central public sector enterprises, would look into the matter, and issue clarifications if any. “As per the current definition they (companies where government ownership is less than 51%) are no longer a government company,” he said. According to Section 2(45) of the Companies Act, a ‘Government company’ means any company in which not less than 51% of the paid-up share capital is held by the central government, a state government, or partly by the central government and partly by one or more state governments. Another government official said if the total stake in a company including that of other government agencies remained 51% or more, then they might come under the scrutiny of the CVC and CAG.


The Standing Conference of Public Enterprises (SCOPE), the apex body of central government-owned companies, is of the view that there might be a need to change the definition of public sector undertakings, if the government wants to retain them under various regulations, such as Right to Information and on Corporate Social Responsibility spending.

“Otherwise, this will also raise the issue whether it (such a company) will be out of the ambit of CAG, CVC and other governmental regulations for state-run firms,” said SCOPE chairman UD Choubey.