India has emerged as the third largest ecosystem for start-ups globally with over one lakh government recognised startups across the country until December 2023.
Sustained efforts by the Government under the Startup India initiative have led to an increase in the number of DPIIT recognised startups from over 300 in 2016 to 1,17,254, by December 31, 2023.
With the number of startups in India increasing, there is a need for a robust governance framework within the startup industry and the Confederation of Indian Industry (CII) has released a charter that adopts sound governance practices by businesses.
According to the industry body, the charter will lay a strong foundation for the continued success of these entities and help them become stable, sustainable and globally competitive in the long run and grow to become global corporations.
R Dinesh, President of CII says that startups have undoubtedly emerged as important contributors to the Indian economy and early adoption of good governance practices will help them evolve into "Leaders of tomorrow".
The CII Charter serves as a guide for startups, outlining governance principles across various stages of their lifecycle. It provides recommendations covering board formation, compliance monitoring, financial oversight, risk management, and stakeholder engagement, among other aspects.
According to Sanjiv Bajaj, former president CII, "Polices of an organisaton such as promoting fairness, transparency, accountability, commitment to values, ethical business conduct, disclosure, trusteeship and considering all stakeholders' interest while conducting business. These values and principles should be reinforced at all levels in an organisation as part of broader Corporate Governance Framework."
Startups have emerged as important contributors to the Indian economy in terms of employment generation, share in GDP, raising capital, foreign direct investment, innovation and social integration.
The CII document says that the Corporate Governance Charter for Startups can serve as a strategic blueprint for fostering integrity, transparency and accountability within emerging enterprises.
The Charter also highlights the role of conflict management, compliance, secretarial and legal aspects, stakeholder engagement and whistle-blower mechanisms in fortifying the governance framework of start-ups.
According to the charter, by following these principles, start-ups can instill trust among investors, employees, and other stakeholders, paving the way for sustainable growth.
A much-discussed topic in the start-up space is corporate governance based on the basic principles of accountability, transparency, fairness and responsibility.
"These guidelines can be used by startups as a ready reckoner as they glide along the path of good governance. The charter may serve as a self-governing code for startups in their compliance journey which they may follow on a best endeavour basis. The purpose of this charter is to help startups become responsible corporate citizens and also enable them to share it with their stakeholders to establish themselves as being well-governed," the CII said. (ANI)
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