The Indian Corporate Affairs Ministry is considering the introduction of more stringent regulations for unlisted companies, including large startups. While there are strict regulatory frameworks and disclosure requirements in place for listed companies, the norms for unlisted companies are not as robust.
Role of the Company Law Committee (CLC)
The Company Law Committee (CLC), a government-appointed panel, is expected to explore the possibility of implementing more rigorous regulations for unlisted companies, especially those that are substantial in size, including prominent startups. The panel will focus on various regulatory aspects, particularly those related to corporate governance.
Balancing Regulation and Ease of Doing Business
The government aims to strike a balance between imposing necessary regulations to ensure good governance and preventing regulatory burdens that hinder the ease of doing business.
Addressing Corporate Governance Concerns
Recent times have seen concerns regarding corporate governance practices and funding issues at certain startups and other unlisted entities. The corporate affairs ministry is working within the framework of the Companies Act, 2013, to potentially introduce stricter rules for unlisted companies.
The Company Law Committee (CLC) was established by the corporate affairs ministry in September 2019. Its mandate is to assess and propose changes to the regulatory framework for companies in India, with a specific focus on unlisted entities. The potential introduction of stricter regulations is part of ongoing efforts to enhance corporate governance and transparency among unlisted companies.
