CII Releases Corporate Governance Charter Customized for Startups By CIOTechOutlook Team

CII Releases Corporate Governance Charter Customized for Startups

CIOTechOutlook Team | Monday, 29 April 2024, 11:49 IST

The Confederation of Indian Industry (CII) has introduced a corporate governance charter specifically tailored for startups. This charter offers customized suggestions and guidelines on corporate governance, catering to the different stages of startup growth, with the aim of enhancing governance practices.

A key feature of the charter is an online self-evaluative governance scorecard, which enables startups to assess their current governance status and track improvements over time. By utilizing this tool, startups can measure their governance progress, with score changes indicating advancements in governance practices as assessed against the scorecard periodically.

This initiative comes in light of recent concerns raised by startups such as Byju’s, BharatPe, GoMechanic, Groyyo, Mojocare, and Zilingo regarding governance standards over the past 12-18 months. Reports have indicated instances of corporate governance failures within well-funded startups in India, which have led investors to exercise caution when considering significant investments.

Corporate governance in India encompasses a set of rules, practices, and processes designed to guide and regulate companies, ensuring fair operation and alignment with the best interests of all stakeholders.

Kunal Bahl, chairman of CII National Startup Council and co-founder of Titan Capital and Snapdeal, highlighted the importance of robust corporate governance for startups. He emphasized embedding the principles of good governance from the early stages of a startup, enabling them to become intrinsic to the organization's culture and facilitating informed decision-making and strategic planning over time.

Chandrajit Banerjee, director general of CII, emphasized that the charter addresses key areas of focus for startups regarding governance and introduces innovative concepts to elevate governance standards across startups in India.

Quoting India’s G20 sherpa Amitabh Kant, a report on March 14 highlighted the significance of good governance practices for startups to transition into successful large companies. This includes aspects such as proper audits and the appointment of competent chief financial officers (CFOs). In response, many startups have begun hiring CFOs, and investors increasingly demand robust financial controls across portfolio firms.