Item: Corporate Laws (Amendment) Bill, 2026 — Complete Guide
Author: Muhammed Fasil K

Corporate Laws (Amendment) Bill, 2026 — Complete Guide

Status Update: The Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026) was introduced in the Lok Sabha on 23 March 2026 and has been referred to a Joint Parliamentary Committee (JPC) for detailed clause-by-clause scrutiny. It is not yet law. Different provisions will be notified by the Central Government on different dates once the Bill is enacted.

Table of Contents

1. Introduction & Background

2. Key Objectives of the Bill

3. Decriminalisation of Offences

4. NCLT Single-Bench Reform for Mergers

5. Fast-Track Merger Reforms (Section 233)

6. New Section 233A — Treasury Shares

7. Share Buyback Reforms (Section 68)

8. Employee Compensation: RSUs and SARs

9. Corporate Social Responsibility (CSR) Relaxations

10. Small Company Threshold Expansion

11. Digital Compliance & Virtual Meetings

12. Director Accountability — Fit & Proper Mandate

13. NFRA Upgrade — Full Statutory Regulator

14. IBBI as Valuation Authority

15. LLP Amendments

16. Company Strike-Off & Restoration Reforms

17. IFSC Companies — Foreign Currency Capital

18. What This Means for You — Practical Takeaways

19. Current Status & Next Steps

1. Introduction & Background

India's corporate law framework is undergoing its most comprehensive reform since the Companies (Amendment) Act, 2020. On 23 March 2026, Finance and Corporate Affairs Minister Nirmala Sitharaman introduced the Corporate Laws (Amendment) Bill, 2026 — Bill No. 85 of 2026 — in the Lok Sabha.

The Bill spans 107 clauses and proposes amendments to two foundational statutes:

The Companies Act, 2013 — governing incorporation, compliance, governance, and winding up of companies.
The Limited Liability Partnership (LLP) Act, 2008 — governing the formation and operation of LLPs.

It was developed on the recommendations of two key expert bodies:

The Company Law Committee (CLC) — tasked with reviewing compliance burden and decriminalisation.
The High-Level Committee on Non-Financial Regulatory Reforms (2025) — focused on ease of doing business and regulatory modernisation.

The central government emphasised that the Bill was the product of over two years of stakeholder consultations spanning industry bodies, legal professionals, company secretaries, chartered accountants, and SEBI.

Shortly after introduction, the Bill was referred to a Joint Parliamentary Committee (JPC), which will scrutinise it clause by clause, invite stakeholder representations, and submit its recommendations before the Bill goes for final debate and passage.

2. Key Objectives of the Bill

The Bill's Statement of Objects and Reasons identifies the following core goals:

Objective	What It Means in Practice
Ease of doing business	Reduce procedural friction at every stage of a company's lifecycle
Decriminalisation	Replace criminal penalties for minor procedural defaults with civil/monetary penalties
Modernisation	Align Indian corporate law with digital-first operations and global standards
Governance strengthening	Sharper accountability for directors, auditors, and valuers where risk is highest
M&A efficiency	Slash timelines for mergers, amalgamations, and restructurings
IFSC integration	Formally integrate IFSC frameworks into the Companies Act and LLP Act

The overarching philosophy, as EY India described in its regulatory alert, is a shift from form-heavy compliance to outcome-based, risk-aligned regulation.

3. Decriminalisation of Offences

This is one of the most business-friendly threads running through the entire Bill. Under the existing Companies Act, 2013, and the LLP Act, 2008, dozens of procedural lapses — many of them technical or administrative in nature — carried the threat of criminal prosecution, including imprisonment.

The Bill decriminalises several offences and replaces imprisonment or criminal fines with civil monetary penalties. Key decriminalised offences include:

Wilful failure to furnish information relating to the affairs of a producer company
Contravention of Rules under the Companies Act
Failure to furnish documents or information required by the Registrar of Companies (RoC)
Violations relating to books of account maintenance
Failure to comply with a Registrar's requisition (other than a summons)
Non-compliance with LLP AGM requirements — previously a criminal offence, now subject to a monetary penalty
Inter-corporate loans and investments contraventions under sub-sections 9 and 10
Filing a strike-off application in violation of prescribed conditions — reduced from a criminal fine of ₹1 lakh to a civil penalty of ₹50,000

New enforcement architecture: Alongside decriminalisation, the Bill introduces a structured civil enforcement framework, including:

Penalty Recovery Officers with defined powers
Settlement mechanisms for companies willing to resolve defaults
Pre-deposit requirements for challenging penalty orders on appeal

Why it matters: The decriminalisation agenda removes the threat of criminal records from the lives of honest directors and professionals who make procedural errors. It also reduces regulatory anxiety for foreign investors who serve as nominee directors on Indian subsidiary boards.

4. NCLT Single-Bench Reform for Mergers

This is arguably the most transformative procedural change in the Bill for M&A practitioners.

The Problem Before

Under the current Companies Act, Sections 230–232 allow the National Company Law Tribunal (NCLT) to sanction schemes of merger, demerger, and amalgamation. However, where the companies involved are registered in different states, each company's scheme application had to be filed before the NCLT bench having jurisdiction over its own registered office.

A merger involving five companies spread across five states required proceedings before five separate NCLT benches — in Mumbai, Delhi, Chennai, Kolkata, Ahmedabad, etc. — simultaneously. These multi-bench proceedings:

Took 12–14 months on average
Required duplicate filings, counsel appearances, and bench-specific compliance
Created inconsistency in judicial interpretation across benches
Made large group restructurings commercially impractical

The Reform

The Bill amends Section 230(1) to provide that all scheme applications under Sections 230 to 233 must now be filed before the single NCLT bench having jurisdiction over the transferee company or resultant company. That single bench will exercise all powers for all companies involved in the scheme, regardless of where the transferor companies are registered.

A savings clause ensures that applications pending before various benches on the date of commencement of the Amendment Act will continue before those benches under pre-amendment provisions.

Impact

The same five-company merger that previously required five NCLT proceedings will now need only one proceeding — before the transferee company's bench.
Deal timelines are expected to compress materially — industry estimates suggest a reduction from 12–14 months to potentially 6–8 months for complex multi-location schemes.
Legal costs fall significantly: no duplicate filings, no multiple counsel appearances, no bench-specific fees.
Greater consistency in judicial interpretation.

As Lexology noted, this single-window approach is a landmark step in judicial efficiency that positions India's M&A procedural framework closer to the standards of comparable common-law jurisdictions.

5. Fast-Track Merger Reforms — Section 233

Section 233 of the Companies Act provides a fast-track route for mergers between certain classes of companies, allowing them to bypass the full NCLT process and seek approval from the Regional Director (RD) instead. The Bill significantly broadens and simplifies this route.

Expanded Eligibility

Fast-track mergers will now be available for a broader set of transactions, including:

Mergers between holding companies and their subsidiaries
A wider class of small companies (on account of increased thresholds — see Section 10 below)
Startups — explicitly brought within the fast-track eligibility
Mergers involving wholly-owned subsidiaries with their parent

Reduced Approval Thresholds

This is a significant practical change:

Approval	Before Bill	After Bill
Creditor approval (in value)	90% (nine-tenths)	75% (three-fourths)
Member approval	90% of total shares	75% of shares held by members present and voting

Reducing creditor approval from 90% to 75% removes a significant holdout problem that minority creditors have historically used to delay or obstruct commercially sensible restructurings.

Regional Director Streamlining

In fast-track cases, the Regional Director will now refer any court matters to the NCLT of the transferee/resulting company only — consistent with the single-bench reform for regular mergers.

For demergers under the fast-track route, the Bill also removes the requirement to file a copy of the scheme with the Official Liquidator, eliminating an administrative step that had no practical purpose in most demerger transactions.

6. New Section 233A — Treasury Shares

This is an entirely new provision introduced by the Bill. Section 233A addresses a governance gap that has existed since the Companies Act came into force.

What Are Treasury Shares?

Treasury shares are shares held by a company in itself — either directly in the company's name or through a trust — following a merger or amalgamation where the transferee company holds shares of the transferor. Under current law, such shares carry voting rights, creating a conflict-of-interest situation where a company effectively votes on its own affairs.

What the Bill Proposes

Section 233A(1): Companies (or trusts) holding treasury shares must dispose of or cancel them within three years from the date of commencement of the Amendment Act.

Section 233A(2): If treasury shares are not disposed of within the three-year period, they shall be cancelled or extinguished — and such cancellation will be treated as a reduction of share capital (a deemed capital reduction, bypassing the formal NCLT approval ordinarily required under Section 66).

No voting rights: Treasury shares will carry no voting rights during the three-year sunset period.

Penalty for non-compliance: ₹10,000 per day of continuing default for the company and every officer in default.

Clause 68 amendment: Section 232(3)(b) is amended so that treasury shares held by a transferee company in itself shall be cancelled or extinguished upon amalgamation itself — closing the window prospectively.

Options for Disposal

Companies holding treasury shares should plan their exit now. Possible disposal routes being contemplated include:

Transfer of shares in the open market
Buy-back by the company
Reduction of share capital (formal process)
Distribution to shareholders

Key Observation

The three-year sunset is generous. Companies should identify their treasury share exposure immediately and begin planning the most tax-efficient disposal route with their advisors.

7. Share Buyback Reforms — Section 68

The Bill introduces two significant relaxations to the share buyback regime under Section 68, aimed at giving companies greater flexibility in capital management and facilitating PE/VC exits.

Dual Buybacks in a Year

Currently, a company must wait at least one year between closing one buyback offer and opening a new one. The Bill proposes allowing prescribed classes of companies (expected to include debt-free companies) to make up to two buyback offers per year, provided the second offer is opened no earlier than six months after the closure of the first.

Higher Buyback Cap for Prescribed Companies

The existing 25% cap on buybacks (as a percentage of aggregate paid-up capital and free reserves) will be replaced with a more flexible framework:

Prescribed classes of companies may buy back up to a higher percentage as prescribed by rules.
For equity share buybacks in any financial year, the cap percentage will be computed with reference to total paid-up equity capital — not aggregate paid-up capital and free reserves — in that financial year.

Practical impact: This is important for PE-backed companies and large conglomerates where capital repatriation has been constrained by the 25% ceiling. The dual-buyback window also opens a new tool for managing equity overhang between fundraising rounds.

8. Employee Compensation — RSUs and SARs

Under the existing Companies Act, only Employee Stock Options (ESOPs) are formally recognised as a form of employee compensation linked to share capital value.

The Bill now formally recognises other equity-linked compensation schemes, specifically:

Restricted Stock Units (RSUs) — shares granted after a vesting period, subject to conditions
Stock Appreciation Rights (SARs) — cash or equity benefits tied to share price appreciation, without requiring actual allotment of shares

What This Means

Legal clarity: Companies can now structure RSU and SAR schemes with the confidence that they are explicitly recognised under the Companies Act.
Compliance alignment: These schemes now have a statutory basis, reducing ambiguity in board resolutions, shareholder approvals, and financial disclosures.
Audit accountability: Since NFRA's expanded jurisdiction (see Section 13) extends to any contravention within its remit, valuations and disclosures for RSU/SAR schemes must now meet regulatory scrutiny — not just internal standards.
Startup ecosystem: RSUs and SARs are widely used in the Indian startup ecosystem. This recognition removes the legal grey zone they have operated in.

9. Corporate Social Responsibility (CSR) Relaxations

The Companies Act requires companies meeting certain financial thresholds to spend at least 2% of their average net profit over the last three years on CSR activities.

The Bill proposes the following changes to the CSR regime under Section 135:

Raised Net Profit Threshold for CSR Committee

The threshold for constituting a mandatory CSR Committee is raised from ₹5 crore to ₹10 crore net profit (or such other sum as may be prescribed). This means companies with net profits between ₹5 crore and ₹10 crore will no longer need a dedicated CSR Committee.

CSR Exemption for Prescribed Companies

The Bill enables the government to prescribe conditions under which companies may be entirely exempted from CSR compliance obligations. This is a significant enabling power — the practical scope will depend on the rules notified.

What Remains Unchanged

The fundamental 2% CSR spending obligation itself is retained.
Companies above the revised thresholds continue to face full CSR compliance.
Penalty provisions for unspent CSR funds remain in force.

10. Small Company Threshold Expansion

The Bill expands the definition of a "small company" under Section 2(85) of the Companies Act, which determines eligibility for simplified compliance requirements.

Under the current Act, a small company is defined as one with:

Paid-up share capital not exceeding ₹50 lakh (or a higher amount prescribed, not exceeding ₹10 crore)
Turnover not exceeding ₹2 crore (or a higher amount prescribed)

The Bill raises these thresholds, bringing more companies under the simplified small company regime. This has downstream effects on:

Audit exemptions: Small companies may qualify for the proposed exemption from mandatory statutory audit under prescribed conditions (rules not yet drafted).
Fast-track merger eligibility: The broader small company definition widens the universe of companies that can use the Section 233 fast-track route.
Annual compliance filing: Small companies enjoy simplified annual return (MGT-7A) and accounts filing (AOC-4) requirements.
Board meeting requirements: Fewer mandatory board meetings per year.

11. Digital Compliance & Virtual Meetings

The Bill codifies a digital-first approach to corporate compliance in several ways.

Electronic Service of Documents

Prescribed classes of companies will be required to serve specified documents to members exclusively through electronic mode in accordance with notified rules. Such electronic delivery will constitute valid legal compliance. Members may request physical copies, subject to a fee approved in a general meeting.

Virtual AGMs and EGMs — Codified

The Bill provides that companies may hold Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) through:

Physical attendance, or
Video conferencing or other audio-visual means (wholly or partly)

However, every company must hold at least one AGM in physical mode within every three years — ensuring that shareholders retain the right to in-person engagement periodically.

EGMs via virtual means may be called with a shorter notice of seven days (instead of the standard 21 days), facilitating faster decision-making when circumstances require it.

Replacement of Affidavits with Self-Declarations

The Bill replaces certain affidavit requirements with self-declarations. This reduces notarisation costs and streamlines compliance processes — particularly relevant for foreign-invested companies where affidavits from overseas directors have been a practical pain point.

12. Director Accountability — Fit & Proper Mandate

While the Bill decriminalises minor procedural defaults, it simultaneously tightens accountability where governance risk is highest.

Fit and Proper Mandate — Section 164 Amendment

An amended Section 164 introduces a "fit and proper" mandate requiring boards to assess and document that every director meets prescribed criteria. Board composition thus shifts, in part, from a purely commercial judgment call to a compliance obligation.

Disqualification for RPT Defaults

Related-Party Transaction (RPT) defaults under Section 188 will now trigger director disqualification, extending personal liability to the individuals who approved the transactions. This is a significant escalation from the current position, where RPT penalties fall on the company.

Key Managerial Personnel — New Section 203A

A new Section 203A establishes a formal resignation process for non-director Key Managerial Personnel (KMPs), such as the Chief Financial Officer and Company Secretary. This addresses a gap in the current law where KMP resignations lacked a structured compliance framework.

Practical Implication for Foreign-Invested Companies

For companies with nominee directors on Indian subsidiary boards, the fit-and-proper requirements and RPT disqualification provisions warrant early legal review of board composition and approval processes.

13. NFRA Upgrade — Full Statutory Regulator

The National Financial Reporting Authority (NFRA), currently a relatively limited body, is proposed to receive a full statutory upgrade under new Sections 132A to 132K. This is one of the most significant institutional changes in the Bill.

NFRA will become:

A body corporate with perpetual succession — giving it a distinct legal identity
An independent regulator with powers comparable to SEBI and IBBI
Empowered to specify regulations on investigation procedures
Empowered to issue advisory, censure, or warning to audit firms
Able to engage domain experts to support its oversight functions
Having direct jurisdiction over any contravention within its remit — removing the current dependence on ICAI referrals

Penalties for non-compliance with NFRA orders: Up to six months' imprisonment and fines up to ₹25 lakh, with civil court jurisdiction excluded (NFRA's orders will be challenged before the appellate tribunal only).

Auditor registration with NFRA: Auditors of prescribed classes of companies must intimate their registration details to NFRA and file returns. Penalties for non-compliance or furnishing false information range from ₹25,000 to ₹50 lakh.

Auditor independence tightened: The Bill reinforces auditor independence by restricting the provision of non-audit services and extending such restrictions for three years post-audit tenure (up from the current position).

This transformation of NFRA signals that India is moving toward a Big 4-style independent audit oversight model, similar to the PCAOB in the United States and the FRC in the United Kingdom.

14. IBBI as Valuation Authority

Current Position

Currently, valuers registered under the Companies Act operate under a fragmented framework with multiple bodies involved in registration, oversight, and standards.

The Bill's Reform

The Bill designates the Insolvency and Bankruptcy Board of India (IBBI) as the Valuation Authority under Section 247. IBBI will:

Grant certificates of registration and recognition to valuers and valuers' organisations
Make recommendations to the Central Government on valuation standards
Ensure compliance with valuation requirements
Impose penalties on registered valuers who contravene provisions

Penalties for valuers: Registered valuers who violate the provisions may face suspension of their certificate for up to 10 years or a penalty of up to ₹10 lakh.

The Bill mandates that all valuations required under the Companies Act must be performed by registered valuers — individuals who hold valid IBBI-issued registration.

What Companies Must Do

All companies that engage valuers for mergers, share transfers, related-party transactions, or other purposes under the Companies Act must ensure their valuers hold valid IBBI-issued registrations going forward. Valuations by non-registered individuals will not constitute compliance.

15. LLP Amendments

The Bill introduces several significant changes to the LLP Act, 2008, some of which will affect how LLPs are used as structuring vehicles — particularly in cross-border M&A and investment contexts.

IFSC-Specific LLP Framework

A formal regulatory framework for LLPs operating within International Financial Services Centres (IFSCs) is introduced, integrating LLPs into the IFSCA regulatory architecture. This enables investment funds, family offices, and other entities in IFSCs to use the LLP structure with appropriate regulatory underpinning.

Conversion of Specified Trusts into LLPs

The Bill introduces a new pathway allowing specified trusts to convert into LLPs. This applies to trusts that are:

Established under the Indian Trusts Act, 1882 or any other central/state Act
Registered with SEBI or IFSCA
Engaged in prescribed activities

This enables seamless restructuring of investment and financial structures — particularly AIFs and infrastructure trusts — into the LLP format.

Tighter LLP Governance

The Bill introduces tighter governance requirements for LLPs, including:

Restrictions on certain foreign-capital structuring options
Enhanced compliance obligations for LLPs with significant business activity
Alignment with the decriminalisation agenda (certain LLP defaults now attract monetary penalties instead of criminal liability)

Important note for deal structuring: These amendments make LLPs less attractive as acquisition or holding-company vehicles in certain cross-border contexts. Deal teams should re-evaluate LLP-based structures in light of the tighter governance and foreign-capital restrictions.

16. Company Strike-Off & Restoration Reforms

The Bill makes it easier to both close and restore a company through several targeted amendments.

Expanded Grounds for Strike-Off — Section 248 Amendment

The grounds for the Registrar of Companies to initiate strike-off of a company are expanded to include companies that:

Have not filed financial statements or annual returns for two consecutive years, or
Have not made any significant accounting transaction in the preceding two years and the current financial year

A formal definition of "significant accounting transaction" aligned with Section 455 is inserted for clarity.

Simplified Strike-Off Applications

Companies applying for voluntary strike-off under Section 248(2) no longer need to cite specific grounds from Section 248(1) — removing a procedural formality.

Regional Director Route for Restoration

Section 252 is amended so that restoration applications now go to the Regional Director rather than the NCLT. This is a significant practical improvement — the RD route is faster and avoids NCLT queues entirely.

Timeline: Revival applications within three years of strike-off go to the RD; applications between three and twenty years go to the NCLT.

Dormant Company Changes — Section 455

Companies that are inactive must now proactively apply for dormant status (previously this was optional). The definition of an "inactive company" is also clarified, reducing ambiguity.

17. IFSC Companies — Foreign Currency Capital

A new provision (proposed Section 43A) enables companies incorporated in International Financial Services Centres (IFSCs) to:

Issue share capital in a permitted foreign currency
Convert existing share capital into a permitted foreign currency
Maintain capital in foreign currency
Maintain books of accounts, financial statements, and other records in the permitted foreign currency (unless IFSCA permits maintenance in Indian rupees)

IFSCA will prescribe the applicable regulations.

This reform formally recognises the operational reality of IFSC-based entities that transact primarily in US dollars, euros, or other international currencies, reducing the compliance friction of maintaining separate currency accounting.

18. What This Means for You — Practical Takeaways

Here is a concise action plan based on the key provisions of the Bill:

For Companies Generally

Identify treasury shares immediately — plan for disposal or cancellation within the three-year sunset window once the Act commences.
Review your auditor's non-audit services — audit independence requirements are tightening; assess whether current arrangements comply with the proposed framework.
Check valuer registrations — ensure all valuers engaged by the company hold valid IBBI registration.
Assess director eligibility against the proposed fit-and-proper criteria under the amended Section 164.

For Companies Planning M&A

Re-evaluate multi-jurisdiction merger structures — the single-bench NCLT reform will dramatically simplify group restructurings.
Explore fast-track merger eligibility — the broader scope of Section 233 makes it available to a wider range of transactions; assess whether your proposed merger qualifies.
LLP-based deal structures — review with counsel in light of tighter LLP governance and foreign-capital restrictions.

For Startups and Growth Companies

RSU/SAR schemes can now be structured with statutory backing — review and align existing schemes with the new legal framework.
Fast-track mergers are now explicitly available to startups — useful for group consolidations and acqui-hires.
Small company threshold may have expanded to cover your company — check eligibility for simplified compliance.

For CS and CA Professionals

Track JPC deliberations — the final enacted Bill may differ materially from the version as introduced.
Note phased commencement — different provisions will come into force on different notified dates; maintain a provision-by-provision tracker.
NFRA compliance — advise audit clients on the new registration and returns filing requirements for auditors of prescribed companies.

19. Current Status & Next Steps

Milestone	Date/Status
Bill introduced in Lok Sabha	23 March 2026
Referred to Joint Parliamentary Committee (JPC)	March 2026
JPC clause-by-clause scrutiny	Ongoing
JPC stakeholder representations	Ongoing
JPC report to Parliament	Expected later in 2026
Parliamentary debate and passage	Post-JPC report
Presidential assent	Post-passage
Commencement notifications (phased)	Post-assent, by MCA

The Bill is currently before the JPC. It is not yet law. Its provisions will come into force only upon notification by the Central Government — and different provisions may be notified on different dates, creating a phased implementation.

Market participants, companies, and their advisors should:

Track the JPC process — representations can still be made; the final legislation may differ meaningfully from the Bill as introduced.
Prepare compliance infrastructure now — updating internal policies, board procedures, and valuer/auditor arrangements before enactment avoids a last-minute scramble.
Watch for implementing rules — many of the most significant changes (such as the small company audit exemption and the prescribed classes eligible for dual buybacks) depend on subordinate legislation that has not yet been drafted.

Conclusion

The Corporate Laws (Amendment) Bill, 2026 is the most wide-ranging reform of India's corporate regulatory framework in nearly a decade. It reflects a deliberate policy choice: separate procedural compliance lapses from genuine governance failures, and treat them differently.

Routine defaults — late filings, documentation lapses, AGM non-compliances — are being moved out of the criminal code and into a civil penalty framework. At the same time, the Bill sharpens accountability for directors, auditors, and valuers in areas where failures carry real governance consequences.

For M&A practitioners, the single-bench NCLT reform and the expanded fast-track merger route are game-changers that will measurably compress deal timelines and reduce costs. For the broader business community, the digital-first reforms, the CSR relaxations, and the small company threshold expansion reduce the compliance burden on genuine businesses while freeing regulatory attention for cases where it is truly needed.

Watch the JPC closely. The final legislation is what matters — and the debate ahead will shape India's corporate law for the next decade.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. The Corporate Laws (Amendment) Bill, 2026 has not yet been enacted. Consult a qualified legal professional for advice specific to your circumstances.

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Corporate Laws (Amendment) Bill, 2026 — Complete Guide

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