Excellence enablers | corporate governance in India start-ups

In their rapid growth years, start-ups often prioritize growth over governance. They should realise that having their investors’ trust is the most important element to gain credibility and reputation in the market.To read the full blog, please click here: https://excellenceenablers.com/corporate-governance-in-indian-start-ups-can-it-help-secure-investor-trust/

1. CORPORATE
GOVERNANCE
IN INDIAN
START-UPS

2. CORPORATE
GOVERNANCE IN
INDIAN START UPS
CAN IT HELP SECURE
INVESTOR TRUST?
EXCELLENCE ENABLERS

3. With the increase in the number of start-
ups in India in the past few years, there is
also a need to have enough checks and
balances to ensure that these entities are
run properly. With voluntary
implementation of sound Corporate
Governance practices, the doors to
sustainable growth and economic
prosperity for such companies will open
as they become bigger in size.
In their rapid growth years, start-ups
often prioritize growth over
governance. They should realise that
having their investors’ trust is the
most important element to gain
credibility and reputation in the
market.

4. It is necessary to have a
proper Board. In start-ups,
often the Board comprises
the promoter(s), his/her
close confidants, and
investor representatives. It
is a good idea to have 1-2
independent directors so
that diverse views are
expressed on current and
future plans of the
company.
SOME OF THE WAYS IN WHICH INDIAN START-
UPS CAN SECURE THEIR INVESTORS’ TRUST
ARE:
They should ensure that
there is a separation of the
post of promoter, who is
often head of management,
and the Chairperson of the
Board of the company.
Though a number of
companies have the
promoter as the Chair and
the CEO, it is a good practice
to have a separation. This
will help the Board in
keeping the promoter under
check, should there be a
need to do so. Having a
Chairperson who does not
understand this could
impede the growth of the
company.
There must be engagement
with all stakeholders. While
there would be ongoing
communication with the
investors, who are the
shareholders of the company,
it is important to also have
continuing communication
with other stakeholders of
the company. This would
include consumers, vendors,
government, media and
society. Continuous
engagement with
stakeholders will help the
company in gaining their
confidence, and will ensure
transparency.

5. SOME OF THE WAYS IN WHICH INDIAN START-
UPS CAN SECURE THEIR INVESTORS’ TRUST
ARE:
It must be ensured that
regular Board Meetings are
held and required
committees are formed. The
company should not have
paper meetings. With a
properly composed Board,
such meetings can add
value.
Risk management
practices must be put in
place, and updated by
addressing new and
emerging risks. Given
how companies woke up
to the need for proper
risk management
measures during and
after COVID-19, it is
important for every
company to have its risk
management strategy in
place, and to review and
update the risk register
continuously.

6. Adopting these measures will ensure
that the company is sustainable in the
long-run. Good Corporate Governance
will help create a brand value for the
company, which would positively
impact on its reputation.
Once a start-up focuses on good
governance, long term value creation
will follow.
SUMMARY

7. Thank you
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