In response to recent regulatory issues surrounding prominent startups like Byju’s, Paytm Payments Bank, and BharatPe, the Ministry of Corporate Affairs is considering implementing closer scrutiny of large unlisted startups in India. Sources within the Ministry of Finance have revealed ongoing discussions and the formation of a regulatory framework through the Company Law Committee.

The Company Law Committee, comprising government-appointed members, convened recently and is poised to meet again to finalize the regulatory structure for large unlisted startups. This initiative comes amidst the government’s efforts to nurture startup growth while addressing concerns related to regulatory compliance and corporate governance in major startups.

The primary goal of this proposed regulatory regime is to provide oversight for companies not directly under the purview of regulatory bodies like the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI). Officials within the Ministry have indicated an ongoing inspection against Byju’s and a commitment to investigate Paytm Payments Bank if prompted by the RBI.

BharatPe, another major player in the startup ecosystem, has also attracted regulatory attention, with the Delhi Police’s Economic Offences wing raising concerns. The Company Law Committee is actively seeking details and status reports regarding these startups’ operations and compliance with existing regulations.

In addition to investigating specific cases, the Committee is evaluating norms and provisions to strengthen investor protection and enhance corporate governance practices without imposing excessive regulatory burdens. Chaired by the corporate affairs secretary, the Committee comprises government officials, industry stakeholders, and experts, focusing on implementing the Companies Act, 2013, and the Limited Liability Partnership (LLP) Act, 2008.

Under existing company law, startups are defined as private companies incorporated under the Companies Act, 2013, and recognized as startups based on notifications from the Department for Promotion of Industry and Internal Trade (DPIIT).

The government’s proactive stance underscores its commitment to fostering a conducive regulatory environment for startups while ensuring transparency, accountability, and investor confidence in India’s burgeoning startup ecosystem.

By Admin

Leave a Reply

Your email address will not be published. Required fields are marked *