A State-owned enterprise (SOE) otherwise known as a: state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, government-owned corporation, commercial government agency, public sector undertaking, or parastatal is a legal entity that undertakescommercial activities on behalf of an owner government. The legal status of SOEs varies from being a part of the government to being stock companies with the state as a regularstockholder. The defining characteristics of SOEs are that they have a distinct legal form and they are established to operate in commercial affairs. While they may also have public policy objectives, SOEs should be differentiated from other forms of government agencies or state entities established to pursue purely non-financial objectives.^[1]

Government-owned corporations are common with natural monopolies and infrastructure such as railways and telecommunications, strategic goods and services (mail, weapons), natural resources and energy, politically sensitive business, broadcasting, demerit goods (alcohol), and merit goods (healthcare).

Definitions[edit]

SOEs can be fully owned or partially owned by government. As a definitional issue, it is difficult to determine categorically what level of state ownership would qualify an entity to be considered as “state-owned”, since governments can also own regular stock, without implying any special interference. As an example, the Chinese Investment Corporation agreed in 2007 to acquire a 10% interest in the global investment bank Morgan Stanley, but it is unlikely that this would qualify the latter as a government-owned corporation. Government-owned or state-run enterprises are often the result of corporatization, a process in which government agencies and departments are re-organized as semi-autonomous corporate entities, sometimes with partial shares listed on stock exchanges.

The term ‘government-linked company’ (GLC) is sometimes used to refer to corporate entities that may be private or public (listed on a stock exchange) where an existinggovernment owns a stake using a holding company. There are two main definitions of GLCs are dependent on the proportion of the corporate entity a government owns. One definition purports that a company is classified as a GLC if a government owns an effective controlling interest (>50%), while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC.

In the Commonwealth realms, particularly Australia, Canada, New Zealand, and the United Kingdom country-wide SOEs often use the style “Crown corporation”, or “Crown entities“. Examples of Crown corporations include the Canadian Broadcasting Corporation and Air Canada before the latter underwent privatization. Cabinet ministers (Ministers of the Crown) often control the shares in such public corporations.

At the level of local government, territorial or other authorities may set up similar enterprises which are sometimes referred to as “Local Authority Trading Enterprises” (LATEs). Many local authorities establish services such as water supply as separate corporations or as a business unit of the authority.