Question

Write short answer to the followings.

What are the demerits of statutory corporation?

Answer 1

The following are some of the demerits of statutory corporation.

1. Time consuming formation- The formation of a statutory corporation is subject to a special statute formed by a legislature. This makes the formation process lengthy and time consuming.
2. Government intervention- They face intervention from the government and other political parties as they involve huge amount of capital.
3. Corruption- The operations of these organisations often involve a possibility of manipulation and corruption which may affect the overall efficiency.
4. Low flexibility- Although they enjoy operational flexibility, statutory corporations still face many rules and regulations which hamper their flexibility.
5. Limited suitability- They are only suitable for large scale projects which involve a huge amount, and hence, do not undertake projects that are small in nature.