Markets have a long memory when it comes to governance failures - this stain will linger long after the headlines fade, crushing both valuation and investor confidence
FinTech BizNews Service
Mumbai, April 18, 2025: SEBI has recently passed an order against Gensol Engineering Ltd. and its promoters. The regulator uncovered fund diversion, corporate governance failures, and a brazen treatment of company money as the "promoters’ piggybank."
Tarun Singh, MD and Founder, Highbrow Securities, explains: “SEBI’s order against Gensol Engineering Ltd. and its promoters is a case in point. This is not an isolated incident—Byju’s, once India’s most valuable edtech startup, now stands accused of similar excesses: alleged financial opacity, delayed audits, and reports of lavish spending while employees and vendors went unpaid. These cases are symptoms of a deeper malaise. Startups, especially in their early stages, operate in a regulatory grey area where oversight is minimal, and the line between personal and company finances is often blurred. The argument that future profits will justify today’s excesses is not just flawed—it is dangerous. If promoters can freely dip into company coffers under the assumption that future profits will cover their tracks, then every startup and listed firm becomes a potential Ponzi scheme—where today’s theft is masked by tomorrow’s promised returns. With the company now barred from fresh capital, its stock faces permanent de-rating. Markets have a long memory when it comes to governance failures - this stain will linger long after the headlines fade, crushing both valuation and investor confidence.”
