The Confederation of Indian Industry (CII) recently urged Indian Startups to create their own charter and distinguish between the goals of the organization and founder.
This is important in current phase as measuring valuation of start up should be on “realistic” basis that can be long term..
“The valuations of businesses should be kept as realistic as possible,” CII said in its Corporate Governance Charter for Start-ups.
The charter will have set of tools like online self-evaluation governance score card that will help Start-ups measure their governance progress. As score changes it will make easier to map progress in governance practices.
The key pointers of the Charter:
The charter emphasized the external auditing of Startups.
“It is important to ensure the maintenance of proper books of accounts, establish transparent policies and procedures to ensure the independence and effectiveness of audit functions, and integrity of reporting,” it said.
“An audit of annual financial statements by an external independent auditor and prevention of conflicts of interest from external auditors are crucial.”
CII noted that startups must ensure timely disclosures by board members and key management personnel to address issues related to conflict of interest.
As part of the charter, CII also launched an online self-evaluative governance scorecard which a start-up may fill in to understand the current level of governance and its progression.
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“For entities to build trust among all its stakeholders, businesses need to adopt the best-in-class Corporate Codes.
“These Codes set a benchmark for monitoring, evaluating, and improving the prevailing governance practices,” said R Dinesh, President of CII and chairman of TVS Supply Chain Solutions Ltd.
The charter also issued guidelines based on the startup’s life cycle, which was segregated into four stages: Inception, Progression, Growth, and Going Public.
