“CORPORATE GOVERNANCE IN STARTUPS POST-IPO: GOVERNANCE FAILURES AND GAPS IN RECENT INDIAN LISTINGS”

India has built a detailed legal framework for listed company governance, drawn from the Companies Act, 2013, the LODR Regulations, the issue of capital rules and the decisions of the Supreme Court. The recent listings of startups, however, show that rules alone do not guarantee good governance. The Paytm matter raised questions about founder classification, committee independence and group exposure, while the Gensol matter shows how weak internal control can allow serious misuse of funds in a fast growing company. Both matters were reached only after the market had suffered losses. The lesson is that governance has to be built into the company before the IPO and not added afterwards. Founders, boards, investors and regulators each have a part to play. Clearer promoter rules, more demanding committee processes, faster removal of legacy special rights and better regulatory coordination can help make the Indian startup story one of trust as well as growth. Since both matters discussed here are either settled without admission or at an early stage, this article draws no final conclusion about individual conduct. Its purpose is to point to structural gaps and to encourage further research as more cases reach a final decision.

Banking Regulation Act, 1949, No. 10, Acts of Parliament, 1949 (India). Companies Act, 2013, No. 18, Acts of Parliament, 2013 (India). Securities and Exchange Board of India Act, 1992, No. 15, Acts of Parliament, 1992 (India). Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (India). Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (India). Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2023, SEBI/LAD-NRO/GN/2023/131 (India). Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (India). Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (India). Cases Needle Indus. (India) Ltd. v. Needle Indus. Newey (India) Holding Ltd., (1981) 3 SCC 333 (India). Sec. & Exch. Bd. of India v. Kishore R. Ajmera, (2016) 6 SCC 368 (India). Sec. & Exch. Bd. of India v. Sahara India Real Estate Corp. Ltd., (2013) 1 SCC 1 (India). Tata Consultancy Servs. Ltd. v. Cyrus Invs. Pvt. Ltd., (2021) 9 SCC 449 (India).