According to PTI, Company Law Committee, a government-appointed panel, is likely to discuss whether there is a need for a stricter regulatory regime for startups against the backdrop of instances of corporate governance concerns at some of the entities, PTI reported Sunday citing a senior government official.
The move comes as part of the government’s efforts to boost the growth of startups in the country amid delay by the Bengaluru-based edtech major BYJU’S in submitting its financial statements and corporate governance concerns.
The official said the corporate affairs ministry has not made its view on whether there is a need for a more rigorous regulatory framework for start-ups. There should not be too much regulatory compliance burden on such entities, the official added.
The Company Law Committee (CLC) -set up by the corporate affairs ministry back in September 2019 – is likely to look into various aspects of the regulatory regime for startups, the official said.
The Committee, headed by the corporate affairs secretary, has government officials, representatives from the industry, and experts, among others as members. It broadly looks at the effective implementation of the Companies Act, 2013, and the Limited Liability Partnership (LLP) Act, 2008 as well as facilitating and promoting greater ease of doing business.
Under the company’s law, a startup is defined as a private company incorporated under it and recognized as a startup in accordance with the notification issued by the Department for Promotion of Industry and Internal Trade.
Startups have been provided various relaxations, including certain exemptions from procedural compliance requirements. Among others, startups are allowed to accept deposits from members without any restriction on the amount for a period of five years from the date of its incorporation.
The official said there needs to be a balance when it comes to regulations for them. Ease of doing business, as well as a compliance-oriented regulatory regime, should be ensured, he added.
Recently, the corporate affairs ministry ordered an inspection of the books of edtech major BYJU’S.
The inspection of the books of Bengaluru-based Think & Learn Pvt Ltd, which operates under the brand BYJU’S, will be carried out by the ministry.