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Corporate governance and restructuring
A listed company answers to a board, to minority shareholders and to a regulator. We help founder-led companies make that transition deliberately, a year or more before the listing date, rather than under deadline pressure during diligence.
What changes when a private company prepares to list
These requirements come from the Companies Act, 2013, its rules and SEBI regulations. Several apply as soon as the company converts to a public company, before any listing.
- Legal form
- Only a public limited company can offer shares to the public. Conversion from a private company under section 14 needs a special resolution, revised articles and ROC approval, and a public company needs at least three directors and seven members.
- Board composition
- A listed public company must have at least one-third independent directors and at least one woman director. Independent directors must be registered in the databank maintained by the Indian Institute of Corporate Affairs and, unless exempt, pass its online proficiency self-assessment test.
- Board committees
- An audit committee with a majority of independent directors, and a nomination and remuneration committee. A stakeholders relationship committee is needed once the company has more than 1,000 security holders.
- Key managerial personnel
- A managing director or chief executive officer (or whole-time director), a company secretary and a chief financial officer, all appointed by board resolution.
- Internal financial controls
- Many private companies are exempt from auditor reporting on internal financial controls. After conversion to a public company that exemption no longer applies, and once listed the directors must also confirm in their responsibility statement that adequate controls are in place and operating effectively.
- Related-party transactions
- Board and shareholder approvals under section 188, and after listing, Regulation 23 of the SEBI LODR Regulations, including audit committee approval and the SME materiality threshold of 10% of annual consolidated turnover or ₹50 crore, whichever is lower.
- Insider trading controls
- A code of conduct under the SEBI (Prohibition of Insider Trading) Regulations, identification of designated persons, and a structured digital database of unpublished price-sensitive information.
Pre-IPO restructuring
The structural issues that most often delay a filing are rarely about the business itself. They are about how its ownership and records have been kept.
- Promoters and promoter group
- Identifying the promoters and promoter group as the offer document will define them, and confirming the source and history of every promoter holding.
- Share capital history
- Reconstructing every allotment and transfer since incorporation, and regularising gaps such as missing return of allotment filings, private placement procedure under section 42, or valuation reports for preferential allotments.
- Convertible instruments and ESOPs
- Planning the conversion or settlement of CCPS, CCDs, warrants and similar instruments before filing, and reviewing ESOP schemes for listing compliance.
- Promoter and director balances
- Loans to and from directors, relatives and group entities. Exemptions available to private companies under section 185 and the deposit rules fall away on conversion, and IPO proceeds can no longer be used to repay promoter or related-party loans.
- Group structure
- Sister concerns and entities in similar lines of business owned by promoters, which the offer document must disclose and which may raise conflict-of-interest questions.
- Dematerialisation
- Obtaining an ISIN, depository agreements and full dematerialisation of promoter holdings, which must be complete before the draft offer document is filed.
How we build internal financial controls
Controls that exist only on paper do not survive an auditor’s test of operating effectiveness. We build them in the order an auditor will examine them.
Process walkthroughs
Order to cash, procure to pay, payroll, inventory, fixed assets, treasury and financial close, documented as they actually run today.
Risk and control matrix
For each process, the risks of misstatement, the control that addresses each one, who performs it, how often, and what evidence it leaves.
Design review
Checking that each control, if performed as described, would prevent or detect the misstatement it targets, and filling the gaps.
Operating effectiveness testing
Sample testing over a period, so that the controls have a track record before the auditor examines them.
Remediation and handover
Fixing failed controls, training process owners, and handing the matrix to the audit committee for ongoing oversight.
Find out what needs restructuring.
The diagnostic covers governance and structure as well as the numbers. You receive a written list of what needs to change, in what order, and roughly how long each item takes.