Abstract

This article examines the landscape of corporate governance in India, specifically focusing on both listed and unlisted companies. Governed by the Companies Act, 1956, and overseen by regulatory bodies like SEBI, listed entities adhere to stringent compliance standards. In contrast, unlisted companies face distinct challenges due to the absence of dedicated regulatory oversight. Influenced by the Anglo-Saxon model, the corporate governance framework in India witnessed regulatory changes in 2015 through the Listing Obligations and Disclosure Requirements (LODR). Unlisted companies, ranging from startups to state-owned enterprises, present unique challenges for regulation. While the Companies Act provides a common framework, differences in ownership structures, regulatory focus, and the private nature of these entities necessitate nuanced governance approaches. Challenges in regulating unlisted companies arise from factors like concentrated ownership, regulatory focus on public markets, and the private nature of these entities. The article outlines reasons for a more lenient regulatory approach, including flexibility for innovation, voluntary compliance, and resource constraints faced by regulatory bodies. Recent developments indicate discussions within the Company Law Committee to subject larger unlisted firms to a more stringent regulatory environment. Issues at Byju's underscore the importance of enhanced scrutiny, prompting considerations such as mandatory quarterly financial reporting for unlisted companies. The article suggests voluntary practices that unlisted companies may adopt to ensure corporate governance, including training programs, whistleblower mechanisms, board committees, ethical guidelines, and transparent financial reporting. The absence of a fixed regulatory authority allows flexibility for unlisted companies to tailor governance measures based on their unique circumstances. In conclusion, the article emphasizes the need for a balanced regulatory approach, considering the diversity of unlisted companies. Recent developments and discussions indicate a proactive stance toward addressing governance concerns. The voluntary adoption of best practices and periodic governance audits are seen as crucial steps toward building stakeholder trust.

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