A regulatory framework for sizable unlisted firms is being considered by the Ministry of Corporate Affairs (MCA), which might have an effect on the entire system. This information was provided by a high government official. The Ministry believes that these enterprises should be subject to stronger rules and regulations since the current ones are still too lax.

For listed firms, the Securities and Exchange Board of India (SEBI) has established a clear set of laws and regulations. The Ministry of Corporate Affairs believes that in this case, it is necessary to consider a proper framework for big unlisted firms as well. These regulations may be covered in the Company Law Committee’s deliberations. This committee’s term was been extended till September 16, 2024.

Although there are many unlisted firms that are relatively substantial and can have an influence on the entire system, the compliance burden on smaller enterprises should be less. The Firms (Amendment) Act, 2020 required unlisted firms that fell under certain categories to periodically provide financial results, however, the Ministry of Corporate Affairs failed to release its notification. The question of what standards should be used to define big unlisted corporations is now being discussed. However, recently, the problems with corporate governance in startups, such as the well-known edtech business Byju’s, have come to light, making this issue even more significant. Deloitte Haskins & Sells have left their position as Byju’s auditor.  The board of directors also lost three members. The Ministry of Company Affairs has requested a probe into Byju’s books once this was discovered. The Ministries are now debating the Companies (Amendment) Act Bill. It should be discussed by the Ministry of Company Affairs during the forthcoming winter session of Parliament.

The MCA Secretary-led Company Law Committee will decide what amendments to the Company Law are necessary. This committee was established by the government with the goals of making it easier for law-abiding businesses to conduct business, encouraging improved corporate compliance for all stakeholders, and resolving emerging problems influencing how businesses operate in the nation. Its goal was to improve the quality of life in the nation.