What is Quasi-Public Corporation

A quasi-public corporation is a type of corporation in the private sector that is backed by a branch of government that has a public mandate to provide a given service. Most quasi-public corporations began as government agencies, but have since become separate entities. It is not uncommon to see the shares of this type of corporation trade on major stock exchanges, which allows individual investors to gain exposure to the company's profit.

BREAKING DOWN Quasi-Public Corporation

A quasi-public corporation is actually a variation on the public-purpose corporation. Like the public-purpose corporation, the quasi-public corporation is created to benefit the public; however, a quasi-public purpose corporation is always operated privately, but the private owners usually have partial government funding or government-chartered mission.

While shares of this type of corporation are sold publicly, creating value and profit for shareholders is a secondary purpose to carrying out its public purpose. The operations of a quasi-public corporation must usually, in some way, contribute to the comfort, convenience or welfare of the general public. A few examples of quasi-public companies include telegraph and telephone companies, oil and gas, water, and electric light companies, and irrigation companies. Quasi-public corporations are often referred to as  public service corporations.

Quasi-public corporations may comprise public companies of an industrial and commercial character, nationalized companies, and companies with majority public shareholding. Many consider quasi-public institutions to be political policy tools because they can, in certain cases, operate with fewer restrictions and greater cost effectiveness than normal public institutions.

For those public-private corporations that receive some type of government funding, such subsidies consist of regular fund transfers intended to compensate for persistent losses, i.e. negative operating surpluses, which they incur on their productive activities as a result of charging prices which are lower than their average costs of production as a matter of deliberate government economic and social policy; by convention, these subsidies are treated as subsidies on products.

Example of a Quasi-Public Corporation

One example of a quasi-public purpose corporation is Sallie Mae, which was founded to advance student loan development. Another example is the Federal National Mortgage Association (Fannie Mae), which is regarded as a quasi-public corporation because it operates as an independent corporation. This company operates under a congressional charter that aims to increase the availability and affordability of homeownership, but it is not treated as any part of the government. Contrary to popular opinion, employees of quasi-public corporations do not work for the government.