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.

  1. Corporate Governance

    Corporate governance is the system of rules, practices and processes ...
  2. Reorganization

    Reorganization is a process designed to revive a financially ...
  3. Board of Directors - B of D

    A board of directors is a group of individuals, elected to represent ...
  4. Common Shareholder

    The rights of common shareholders give them the ability to influence ...
  5. Private Company

    A company whose ownership is private. As a result, it does not ...
  6. Interlocking Shareholdings

    A method of creating a unified business group by exchanging shares. ...
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