Unlisted But Influential: Why Private Companies Need Stronger Corporate Governance?
- IJLLR Journal
- Aug 27
- 1 min read
Prachi Jaiswal, The West Bengal National University of Juridical Sciences
Introduction
Corporate governance refers to the systems, processes and rules used to govern the management and control of a company.1 In the evolving landscape of corporate India, governance discourse has traditionally centered around listed companies, driven by investor protection mandates and regulatory scrutiny from bodies like SEBI. However, private and unlisted companies, while often shielded from the public eye, wield significant economic and social influence. They form a substantial part of the Indian corporate sector, accounting for a major share of employment generation, innovation, and private capital flows. The assumption that unlisted companies pose lesser systemic risks due to the absence of public shareholders is increasingly proving to be misplaced. High-profile governance lapses in prominent unlisted entities such as Byju’s have demonstrated how their failures can cascade through supply chains, disrupt financial markets, and erode stakeholder trust.
Unlike listed entities, private companies operate with greater operational flexibility and less stringent disclosure requirements, which, while facilitating entrepreneurship, also create spaces for opacity, related-party transactions, and weak board oversight. As family-owned businesses, start-ups, and unicorns continue to grow in size and global interconnectedness, the boundaries between private and public impact are blurring. Investors, creditors, employees, and even regulators are increasingly demanding governance practices that ensure accountability, transparency, and ethical conduct irrespective of listing status. The need for stronger governance in private companies is not merely a matter of compliance it is a strategic imperative to build sustainable businesses, attract long-term capital, and prevent reputational and financial crises.
