CII’s Corporate Governance Charter for Startups

The Confederation of Indian Industry (CII) launched a new Corporate Governance Charter for startups  to provide guidance on good governance practices tailored to the unique needs of startups at different stages of growth.

About Corporate Governance Charter

The Charter serves as a voluntary, self-governing code to help startups become responsible corporate citizens and demonstrate good governance to stakeholders. It is designed for entities incorporated under the Companies Act, 2013. The key objectives are:

• Promote adoption of good governance practices early in a startup’s lifecycle
• Enable startups to gain benefits like value creation, trust, access to finance, effective structures
• Improve long-term survival chances for startups

Guidelines by Startup Stage

The Charter provides governance guidelines for four stages of a startup’s lifecycle:

1. Inception: Focus on board formation, tone at the top, compliance, accounting, finance, audits, related party transactions, conflict resolution.
2. Progression: Expand board oversight, monitor metrics, maintain controls, define decision-making, focus on finance and audits, set up committees, manage risk.
3. Growth: Build stakeholder alignment with vision/values, form board committees, ensure diversity and inclusion, fulfill statutory requirements, monitor fund use, comply with CSR/ESG, plan succession.
4. Going Public: Monitor committees, prevent fraud, redress grievances, manage stakeholders, review policies and controls, comply with SEBI/stock exchange rules.

Key Benefits

Early adoption of governance best practices provides startups tangible and intangible benefits enlisted as below:

• Long-term value creation
• Stakeholder trust
• Better access to finance
• Reduced promoter reliance
• Effective organization structures
• Improved survival odds

About The Confederation of Indian Industry (CII)

The Confederation of Indian Industry (CII) is a premier business association in India, founded in 1895. It works to create a conducive environment for the growth of industry through advisory and consultative processes.

• Headquarters: New Delhi
• Founded: 1895
• Members: Over 9,000 from the private and public sectors
• Sectors represented: Manufacturing, infrastructure, agriculture, and services
• Initiatives: Policy advocacy, trade fairs, networking events, and skill development programs
• Partnerships: Works closely with the government and international organizations

New Corporate Governance Charter provides startups a path to becoming responsible corporate citizens.

Month: Current Affairs - April, 2024

Category: Economy & Banking Current Affairs