News Excerpt:
The Confederation of Indian Industry (CII), a leading industry body, has come up with a Corporate Governance Charter for startups to serve as a self-governing code in their compliance journey.
What is Corporate Governance?
Corporate Governance in India is a set of rules, practices, and processes by which a company is guided and controlled. It ensures that the company is run fairly to achieve the best interests of all stakeholders such as shareholders, investors etc.
About the Corporate Governance Charter :
- It will provide suggestions on corporate governance tailored for startups and offer guidelines suitable for different stages of a startup aiming to enhance governance practices.
- The charter includes an online self-evaluative governance scorecard that startups can use to evaluate their current governance status and its improvement over time.
- The tool allows startups to measure their governance progress, with score changes indicating improvements in governance practices as assessed against the scorecard from time to time.
- The charter is aimed at helping startups become responsible corporate citizens and enabling them to establish themselves as well-governed entities.
- The Charter has been curated to provide guidance to startups during their life cycle segregated into four stages:
- Inception,
- Progression,
- Growth
- Going public.
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STAGES |
FOCUS ON |
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INCEPTION |
The first focus remains on the Board Formation, Compliance Monitoring, Accounting, Finance, External Audit, Policies for related party transactions, and Conflict Resolution Mechanisms. |
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PROGRESSION |
The startup may additionally focus on the expansion of board oversight, monitoring key business metrics, maintaining internal controls, defining a hierarchy of decision-making, a focussed overview of finance, accounts, and external audit, setting up an audit committee, and risk & crisis management. |
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GROWTH |
It also focuses on building stakeholder awareness towards the vision, mission, code of conduct, culture, ethics of the organization, functional policies & procedures, forming board committees, and ensuring Diversity, Equity & Inclusion (DE&I) on Board. They must also comply with the Companies Act 2013 and other laws, prioritize fund management, adhere to CSR & ESG standards, oversee strategic advancement, and manage human resources effectively. |
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GOING PUBLIC |
They may also expand their governance in terms of monitoring of functioning of various committees, focusing on fraud prevention and detection, grievance redressal mechanism, minimizing information asymmetry, effective stakeholder management, succession planning, and board performance evaluation. At this stage, they should also review governance policies, internal controls, social media policies, and compliance programs to ensure compliance with the Companies Act 2013 and ensure timely statutory filings and disclosures. |
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Confederation of Indian Industry (CII)
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