Confederation of Indian Industry (CII), a leading industry body, has come up with a Corporate Government Charter for startups to serve as a self-governing code for them in their compliance journey.
The Charter, which startups may follow on a best-endeavour basis, is aimed to help them become responsible corporate citizens and also enable them to share it with their stakeholders to establish themselves as being well-governed.
The Charter is intended to be used by startups as a “ready reckoner” as they glide along the path of good governance, CII has said.
The Charter has been curated to provide guidance to startups during their life cycle segregated into four stages: Inception, progression, growth and going public.
During each stage, governance tenets that may additionally be focused on have been identified.
R Dinesh, President, CII & Chairman, TVS Supply Chain Solution, said that early adoption of good governance practices helps startups gain tangible and intangible benefits including long-term value creation, stakeholders’ trust, better access to finance from investors and banks, reduced reliance on promoters, effective organisational structures and improved chances of long-term survival of the business.
He hoped that the Charter will enable early adoption of good governance practices amongst startups and help them evolve into Leaders of Tomorrow.
In the ‘Inception’ stage, startup governance may be focussed on Board formation, setting the tone at the top, compliance monitoring, accounting, finance, external audit, policies for related party transactions and conflict resolution mechanism, the CII Charter has said.
At the ‘progression’ stage, startup may additionally focus on expansion of board oversight, monitoring key business metrics, maintaining internal controls, define hierarchy of decision making, focussed overview of finance, accounts and external audit, setting up audit committee and risk & crisis management.
When a startup reaches ‘growth’ stage, it may also focus to build stakeholder awareness towards vision, mission, code of conduct, culture, ethics of organization, functional policies & procedures, form board committee and ensure Diversity, Equity & Inclusion (DE&I) on Board.
They should fulfil statutory requirements as per Companies Act 2013 and all other applicable laws and regulations, focus on fund utilization, monitoring and review, comply with CSR & ESG norms, monitor strategic progress and human resources related aspects.
At the ‘going public’ stage, startups may expand its governance in terms of monitoring of functioning of various committees, focus on fraud prevention and detection, grievance redressal mechanism, minimize information asymmetry, effective stakeholder management, succession planning and board performance evaluation.
They should also undertake review of governance policies, internal controls, social media policy, compliance program to ensure compliance with Companies Act 2013, SEBI LODR and stock exchange regulations and ensure timely statutory filings and disclosures, CII Charter said.