A Government Company means any company in which not less than 51% of the paid-up share capital is held by:
1. The Central Government, OR
2. Any State Government(s), OR
3. Partly the Central Government AND partly one or more State Governments.
## Subsidiary of a Government Company
The definition expressly includes a company which is a subsidiary of such a Government company. (So even a private operating arm under a Government holding company is a "Government Company.")
## Differential Voting Rights Adjustment
Where shares with differential voting rights have been issued, the expression "paid-up share capital" shall be construed as "total voting power". This prevents structures where Government holds majority shares but loses majority voting rights through DVR mechanics.
## Key Pointers
The threshold is not less than 51% (i.e., 51% or more) — exactly 50% does not qualify.
Includes mixed holding (Central + State together) — they aggregate for the test.
Whether the company is listed/unlisted/public/private is irrelevant to the classification.
Subsidiaries of Government companies inherit the status.
Worked example
### Example 1
Example 1: Coal India Ltd has 66% of its paid-up capital held by the Central Government. → It is a Government Company.
### Example 2
Example 2: XYZ Ltd has 30% held by Central Government and 25% held by Maharashtra Government (total 55%). → It is a Government Company (combined Central + State holding ≥ 51%).
### Example 3
Example 3: ABC Ltd is a wholly-owned subsidiary of NTPC Ltd (a Government Company). → ABC Ltd is also a Government Company (subsidiary inclusion).
### Example 4
Example 4: PQR Ltd has issued DVR shares. Central Government holds 60% of paid-up capital but only 45% of total voting power. → PQR Ltd is NOT a Government Company (Explanation: voting power, not paid-up capital, is the test when DVR shares are issued).
⚠️ Common exam mistakes
Using 50% as the threshold — the test is not less than 51% ("≥ 51%").
Forgetting to aggregate Central + State Government holdings — they can combine.
Missing the Explanation: when DVR shares exist, voting power (not paid-up capital) is the relevant test.
Failing to recognise a subsidiary of a Government Company as itself a Government Company.
Assuming the company must be unlisted or a PSU — there is no such requirement in the definition.
Bare-Act text Section 2(45) · Companies Act, 2013 · click to expand
Section 2(45): "Government company" means any company in which not less than fifty-one per cent. of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company. Explanation: For the purposes of this clause, the "paid-up share capital" shall be construed as "total voting power", where shares with differential voting rights have been issued.