In response to growing concerns surrounding bigger unlisted companies like Paytm Payments Bank and ed-tech startup Byju's, the Company Law Committee (CLC) is set to release a comprehensive report outlining new regulations tailored for larger unlisted startups. Sources from the Ministry of Corporate Affairs (MCA) indicate that the report is expected within the next three months.
MCA has also asked the Registrar of Companies (ROC) to expedite the inspection of Byju’s. However, MCA officials said that they are not involved in the Paytm Payments Bank matter as it is being dealt with by the competent authority, i.e. RBI.
The CLC has been working on making the regulatory environment better and transparent for larger startups for a year now. The focus includes formulating a clear definition for larger startups, with considerations such as net worth, capital raised, and turnover forming the basis of this classification. The intent is to establish a robust framework, incorporating extra measures to ensure the governance and accountability of significant startups.
The forthcoming report by CLC is anticipated to outline provisions aimed at enhancing control for both investors and board directors within these startups. This move underscores a commitment to bolstering transparency and accountability in the startup ecosystem. CNBC TV-18 had reported last year that the MCA was contemplating the inclusion of quarterly reports by larger startups as part of regulatory measures for more effective oversight.
In an effort to gather comprehensive insights, the MCA has sought feedback from key professional bodies, namely the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI).
(Edited by : Pihu Yadav)
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