The Corporate Laws (Amendment) Bill, 2026 (“Bill“), introduced in the Lok Sabha on March 23, 2026, marks another incremental and deliberate step in India’s corporate law reform journey. Targeting both the Limited Liability Partnership Act, 2008 (“LLP Act“) and the Companies Act, 2013 (“Companies Act“), the Bill seeks to rebalance the regulatory framework by reducing friction in routine compliance while tightening oversight in areas that directly impact governance and market integrity. While the amendments to the LLP Act introduce a specialised regime for International Financial Services Centre (“IFSC“) entities and streamline procedural requirements, the proposed changes to the Companies Act, 2013 are more expansive, focusing on decriminalisation, digital governance, enhanced regulatory oversight, and greater operational flexibility.
This article sets forth the key amendments proposed by the Bill to the Companies Act.
Substitution of Criminal Liability with Monetary Penalties
The Bill proposes to substitute criminal consequences with monetary penalties across several provisions. Defaults relating to issuance of prospectus, audit requirements, related party transactions, annual general meetings (“AGMs“) and failure to furnish information or documents to the Registrar are proposed to be reclassified as civil defaults attracting prescribed penalties. Corresponding amendments also introduce graded penalties and structured recovery mechanisms.
Incorporation and Administrative Requirements
The Bill seeks to expand the qualifying thresholds of a small company i.e. the upper limit of paid-up capital is proposed to be increased from INR 10 crore to INR 20 crore and upper limit of turnover is proposed to be increased from INR 100 crore to INR 200 crore. The Bill also proposes to allow companies that had changed their financial year to realign the same with the April 1 to March 31 financial year, this can be done based on an application made by the company or any other company for commercial considerations.
Certain amendments have been proposed by the Bill with respect to incorporation process. Amendments to Section 7(1) seek to limit the requirement of professional declarations at the time of incorporation to cases where such professionals are engaged by the company for incorporation. Section 4(5) proposes to rationalise penalties relating to company name approvals by prescribing a fixed penalty of Rs. 50,000/- (Rupees Fifty Thousand).
Additionally, a new Section 12A has been introduced, which requires prescribed classes of companies to maintain a website, email address and other communication modes, and to intimate such details to the Registrar.
Electronic Processes and General Meetings
An amendment to Section 20(2) is proposed to mandate electronic mode of service of documents for specified classes of companies, while allowing members to request physical copies on payment of prescribed fees. Provisions have been introduced enabling companies to hold annual and extraordinary general meetings in physical, electronic, or hybrid modes, and permit shorter notice for meetings conducted through electronic means. However, every company would be required to hold its annual general meeting in physical mode at least once in every 3 (three) years.
Capital Structure and Corporate Actions
In relation to buy-back of shares, amendments to Section 68 seek to introduce greater flexibility for prescribed classes of companies by permitting multiple buy-backs within a financial year, as may be prescribed. The amendments also provide for relaxation of existing limits and conditions applicable to buy-backs, including removal of the requirement to file a declaration of solvency in the form of an affidavit. Further, non-compliance with buy-back provisions (other than those relating to deposit of application money) is proposed to be decriminalised and made subject to monetary penalties instead of criminal punishment.
A new Section 43A permits companies incorporated in IFSCs to issue and maintain share capital, accounts, and records in permitted foreign currency, subject to applicable conditions.
The time period for registration of charges for certain classes of companies has been proposed to be increased to 120 (one hundred and twenty) days instead of 60 (sixty) days.
Investor Protection Framework
Amendments to Section 124 clarify that unpaid or unclaimed dividends on the shares which have been transferred to the Investor Education and Protection Fund (“IEPF“) Authority, shall also be transferred to IEPF. Section 125 is proposed to expand the scope of amounts transferable to the IEPF to include additional categories such as unpaid amounts relating to extinguished buy-back shares, and to enable delegation of functions by the Authority.
Directors and Governance
A framework for verification, deactivation, cancellation, surrender and restoration of Director Identification Numbers, including periodic verification requirements has been proposed and the disqualification criteria of directors has been expanded to include additional categories such as auditors, valuers, and insolvency professionals not meeting prescribed standards.
Corporate Actions and Exits
The Bill proposes to reduce the approval threshold for members and creditors in fast-track mergers or demergers, from 90% (ninety percent) to 75% (seventy five percent) i.e. approvals will be required from members and creditors holding 75% in value of shares or outstanding debt held by the members who are present and voting. Additionally, the Bill provides for single bench jurisdiction of the National Company Law Tribunal (“NCLT“) and the schemes will be required to be filed only with the NCLT having jurisdiction over the transferee or resultant entity. In case of demergers, the scheme will not be required to be filed with the Official Liquidator.
The Bill also proposes additional grounds on which the Registrar can strike off the names of defunct companies. Such grounds will include no significant accounting transactions during the last 2 (two) financial years and the current financial year and failure to file financial statements or annual returns for 2 (two) consecutive financial years.
Key Takeaways
The Bill proposes extensive revisions to the Companies Act across compliance, governance, and enforcement provisions. Key changes include substitution of criminal liability with monetary penalties for several defaults, introduction of electronic processes for corporate actions, expanded flexibility in capital structuring and buy-backs, strengthened audit and regulatory frameworks, and enhanced mechanisms for appeals, compounding, and penalty recovery. The amendments also introduce new compliance requirements relating to digital communication, director identification, and investor protection mechanisms.
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