How Startups can Embrace Governance as an Enabler

GOVERNANCE IS A COMPREHENSIVE CONCEPT THAT ENTAILS STATUTORY COMPLIANCE, TO DETERMINE THE RIGHT DECISIONS, AND GOING BEYOND THE LETTER AND EMBRACING THE SPIRIT. STARTUPS MUST EMBRACE THE IMPORTANCE OF COMPLYING WITH THE STATUTES. LAW DOES NOT PROVIDE LEEWAY BETWEEN INTENTIONAL OR INADVERTENT SLIPS.

- SUMIT KESHAN

Time and again, we come across fraud, intentional misreporting, mismanagement of funds, and other such offenses that shake our belief in the ecosystem. It should be a wake-up call for all stakeholders. A study by Redseer Strategy consultants cited the "absence of governance" as one of the reasons that have led to many startups being even shut down.

The Indian startup ecosystem is snowballing, being the third largest in the world, and managing to draw large domestic and overseas capital. It is important to note that any instance of fraud or misreporting - unintentional or otherwise - is liable to penal action from various authorities. There are numerous instances in the past, e.g., an internet company in 2008 forged bank certificates in the hope of regularizing them as performance improves; Enron is another classic case study; more recent ones involve a financial services company, and FTX/ bitcoin issue - the list unfortunately is long.