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Corporate Governance Charter for Start-Ups


Why is it in the news?

  • The Corporate Governance Charter for Start-ups was released by Confederation of Indian Industry (CII).
  • It is in response to the erosion of shareholder value in Indian startups, exemplified by recent high-profile governance failures like BharatPe and GoMechanic.

More about the news

  • Corporate Governance is a vital framework of value-driven principles guiding an organization’s trajectory, grounded in Transparency, Fairness, and Accountability.
  • The charter aims to instil stability, growth, and resilience in startups, emphasizing ethical practices and responsible governance at all stages of their development.
  • The charter serves as a self-governing code specifically tailored for startups incorporated under the Companies Act, 2013.
  • Provides tailored guidelines for startups at various stages of their lifecycle, including Inception Stage, Progression Stage, Growth Stage, and Going Public Stage.
  • Offers clear definitions of roles and responsibilities for members of the Board and directors, particularly in the Progression Stage.
  • Facilitates startups in assessing their current governance status and monitoring improvement over time.
  • Further, it enables startups to measure their adherence to governance principles and identify areas for enhancement.
Key Legal Provisions Related to Corporate Governance in India

·      Companies Act, 2013: Provides a comprehensive legal framework for corporate governance, outlining the rights, duties, and responsibilities of companies, directors, and stakeholders.

·      Securities and Exchange Board of India (SEBI): Monitors corporate governance practices of listed companies and ensures compliance with regulatory requirements.

·      National Foundation for Corporate Governance (NFCG): Established by the Ministry of Corporate Affairs, promotes good corporate governance practices through research, advocacy, and capacity building initiatives.

 

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