DEFINITION of 'Corporatization'

The act of reorganizing the structure of government owned entity into a legal entity with the corporate structure found in publicly trade companies. These companies tend to have a board of directors (B of D), management and shareholders. However, unlike publicly traded companies, the government is typically the company's only shareholder and that the shares in the company are not traded publicly.

BREAKING DOWN 'Corporatization'

The main goal of corporatization is allowing the government to retain ownership of the company but still enable it to run as efficiently as its private counterparts because government departments sometimes are inefficient with the level of bureaucracy involved.

Furthermore, the government may one day feel that the private sector could do a better job of running the company, possibly conducting an offering on the stock market in order to divest it.

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  2. Organizational Structure

    Explicit and implicit institutional rules and policies designed ...
  3. Nationalization

    Refers to the process of a government taking control of a company ...
  4. Corporation

    A legal entity that is separate and distinct from its owners. ...
  5. Public Company

    A company that has issued securities through an initial public ...
  6. Going Public

    The process of selling shares that were formerly privately held ...
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