Amitabh Kant, India’s G20 Sherpa and former CEO of NITI Aayog, has called for the establishment of a self-regulatory framework for Indian startups amidst increasing instances of corporate governance lapses and disputes within the sector. Kant emphasized the importance of integrity in achieving long-term growth and highlighted recent failures in corporate governance within internet companies in India.
Kant stressed the need for clear guidelines for self-regulation of startups at all stages, from inception to early and growth stages, and even during the IPO process. He urged startups to ensure compliance with regulations and to question themselves in case of any non-compliance.
Integrity and good governance were identified as crucial factors for startups to evolve into top-class companies in the long term. Kant urged founders to prioritize these values to sustain and grow their ventures effectively.
In recent times, several cases of corporate governance lapses have come to light in the Indian startup ecosystem. Companies such as Zilingo, BharatPe, GoMechanic, Mojocare, and Rahul Yadav’s Broker Network have faced disputes and issues related to governance and financial reporting. Such incidents have the potential to undermine investor confidence in the Indian startup ecosystem.
Kant warned that constant stories of failures and poor governance would erode the trust of global investors in the Indian startup ecosystem. He emphasized the need for startups to provide robust and timely financial reporting, stating that this was the need of the hour.
The edtech giant BYJU’S, one of India’s most popular startups, has faced criticism for delays in filing financial statements. It published its FY21 financial report with a delay of 12 months and is yet to file its FY22 results. Deloitte resigned as the company’s statutory auditor, citing the delay in filing financial statements for FY22.
The call for a self-regulatory framework and improved corporate governance practices reflects the growing importance of accountability and transparency in the Indian startup landscape. Establishing and adhering to such standards will be crucial for the long-term success and sustainability of startups in the country.
