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Corporate Governance Charter

Facts for Prelims (FFP)


Source: ET


Context: Recently, CII (Confederation of Indian Industry) introduced a corporate governance charter tailored for startups, featuring a self-evaluative scorecard to assess governance progress.


What is Corporate Governance?

It comprises dynamic principles and measures guiding an organization’s growth. It emphasizes values like transparency, fairness, and accountability. The charter release responds to the erosion of shareholders’ value in Indian startups, prompted by governance failures in notable firms like BharatPe and GoMechanic.


Key Highlights of the Charter:

  1. Objective: The charter acts as a self-governing code for startups under the Companies Act, 2013.
  2. Benefits: It aids startups in enhancing value, stability, growth, resilience, competitiveness, and long-term success.
  3. Guidelines: Tailored for different startup stages: Inception, Progression, Growth, and Going Public, offering clear role definitions.
  4. Online Scorecard: Enables startups to assess their governance status and track improvements over time.


Definition of Startups:

According to the Income Tax ActA startup in India is a private limited company, partnership firm, or limited liability partnership (LLP) that meets the following criteria:
Incorporation: The startup must be incorporated or registered within the last 10 years
Turnover: The startup’s annual turnover must be less than INR 100 crore in any financial year since incorporation
Innovation:  The startup must work on developing or improving a product, process, or service, or have a scalable business model with the potential to create wealth and employment
Originality: The startup must not be formed by splitting or reconstructing an existing business
As per the earlier Definition Of Startup by the Department of Industrial Policy and Promotion (DIPP)A startup is an entity incorporated as a private limited company, an enterprise in a partnership or as an LLP (Limited Liability Partnership) in India whose revenue is up to Rs 25 crores



About CII:

The Confederation of Indian Industry (CII) is a non-governmental trade association and advocacy group based in New Delhi, India, established in 1895. It collaborates with business, political, academic, and societal leaders to influence global, regional, and industry agendas. CII operates on a membership basis and has been designated as the B20 India Secretariat by the Indian government for leading the B20 India process during India’s G20 Presidency in 2023.