Large Unlisted Businesses May Be Liable For Regulation

A key group at the Ministry of Corporate Affairs (MCA) is thinking about creating rules for big private companies, including unicorns (highly valued start-ups), to make sure they follow better corporate rules. This means they might have to regularly share financial information with the MCA, and this idea came up because of concerns about how edtech company BYJU’s was managed.

Once a committee led by MCA secretary Manoj Govil decides on these rules, they might classify these big private companies based on factors like how much money they make. Right now, even though they are influential and make a lot of money, these big private companies don’t have to follow the same rules as small public companies.

India has a growing start-up scene, and there are many unicorns. Therefore, this is important to have proper rules for these big private firms.

Earlier this year, BYJU’s faced problems because it didn’t announce its financial results on time, and some directors and the auditor left. The MCA is now checking BYJU’s finances to see if there were any problems with how it was managed.

The MCA is talking to other government departments to decide on changes to the Companies Act. These changes will probably be based on suggestions from the Company Law Committee, with some adjustments. The committee suggested various things last year, like making it easier to issue and hold shares, changing rules for raising money in struggling companies, and improving how audits work.