CII brings out new corporate governance charter for startups

The Confederation of Indian Industry (CII) has launched a corporate governance charter for startups. It will provide suggestions on corporate governance tailored for startups and offer guidelines suitable for different stages of a startup which is 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 guidance provided to startups will be structured across four key stages: inception, progression, growth and going public. Each stage emphasises particular governance principles that may need extra focus during that phase of the startup journey.

It comes at a time when startups such as Byju’s, BharatPe, GoMechanic, Groyyo, Mojocare and Zilingo have raised concern over governance standards in the past 12-18 months. In November last year, ET had reported that corporate governance failures within well-funded startups in India had made investors hesitant to invest large amounts.

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 in a fair manner to achieve the best interests of everyone associated with it.

“While startups thrive on innovation, disruption and the fast-paced pursuit of growth opportunities, robust corporate governance improves the quality of their decisions and promotes long-term strategic thinking,” said Kunal Bahl, chairman, CII National Startup Council.

Bahl, cofounder of Titan Capital and Snapdeal, further said, “It is vital to embed the tenets of good corporate governance from the earliest days of a startup so that, over time, they become part of the organisation’s DNA, helping guide and steer the startup and all its stakeholders through various stages of its growth and evolution.”

According to Chandrajit Banerjee, director general of CII, the charter includes key areas of focus for startups regarding governance and innovative concepts to improve the overall governance standards of startups in India.

On March 14, ET had reported quoting India’s G20 sherpa Amitabh Kant, who said for a startup to evolve into a successful large company, it is crucial to have good governance practices, which include having proper audits and a competent chief financial officer (CFO). Over the past one year, several early and mid-stage startups have started hiring CFOs. Investors are also increasingly demanding that startups have adequate financial controls across portfolio firms.