Big unlisted companies may come under tighter regulatory norms

NEW DELHI: The Company Law Committee is likely to take up a proposal to introduce tighter regulatory norms for big unlisted companies.

According to sources, among the steps that are being considered is the mandatory submission of quarterly financial statements by unlisted companies including major startups in order to keep a closer scrutiny on their financial position and check malpractices.

The Company Law Committee has been set up by the Ministry of Corporate Affairs to help look at such issues.

Inter-ministerial discussions on amending the Companies Act are reported to have also taken place to bring in tighter rules for unlisted large firms.

The development is reported to have taken place in the backdrop of corporate governance issues that arose at ed-tech giant Byju’s. The auditors and three board members of the company had resigned recently over differences with founder Byju Raveendran on key operational issues.

Deloitte said it had decided to resign as the auditor for Byju’s as the company did not allow it to commence audit, which was already delayed, and this was a violation of company norms.

The auditor had quit at a time when Byju’s had plunged into a debt crisis and was unable to repay its loans as a major controversy broke out with its lenders. The company had then moved court against the lenders and was later able to reach an agreement over the repayment schedule of its dues.