Amendments to the Companies Act, 2013 – Journey So Far
| Year | Nature of Amendments |
| 2013 | Enactment of the Revised Companies Act |
| 2015 | First set of Amendments – Minor Corrections |
| 2017 | Decriminalisation of Minor Offences, Governance Reforms |
| 2019 | NCLT Related Amendments |
| 2020 | Covid Era Reforms – Digital Meetings, Ease of Compliance |
| 2026 | Now in Proposal Stage – Comprehensive New Age Reforms Bill No. 2026 |
The New Age Reforms:
The Corporate Laws (Amendment) Bill 2026, introduced in the Lok Sabha on 23rd March 2026 represents the most significant recalibration of India’s corporate regulatory framework since this 2013 Act was originally enacted. Designed to harmonise the legal landscape, the Bill proposes 107 amendments that bridge the gap between traditional compliance and modern digital-first business practices. At its core, the 2026 Bill is a testament to the government’s shift towards trust-based governance. By doubling the thresholds for small companies, institutionalising hybrid meetings and shifting dozens of criminal offences to an administrative penalty regime, the legislation seeks to promote a culture of facilitation – a far cry from being a punitive one that it had become. As the Bill moves to a 31-member Joint Parliamentary Committee (JPC) for detailed scrutiny, it also has generated an intense debate over whether the proposed legislation suffers from “excessive delegation” of powers – from the legislature to the executive. Another area of concern is the potential dilution of Corporate Social Responsibility (CSR) and audit accountability through these amendments. For the professional community, any new Bill is not just a regulatory update; it is a structural transformation. The Bill introduces novel initiatives and flexible capital instruments. This includes:
- Decriminalisation – shifting over twenty technical lapses from criminal courts to an In-House Adjudication Mechanism (IAM).
- MSME Empowerment – doubling “Small Company” limits to a ₹20 crore capital and ₹200 crore turnover threshold.
- Digital Transformation – making virtual AGMs and electronic services of documents a permanent statutory feature.
- Regulatory Rigour – strengthening the National Financial Reporting Authority (NFRA) and introducing “fit and proper” criteria for directors for the first time.
This article explores these pivotal changes in the offing while examining whether the 2026 Bill strikes the right balance between ease of doing business and the necessary oversight required to protect India’s evolving economic ecosystem. As the government’s intention is to substantially change some of the provisions of the extant Act, here are some important inputs that are required to be kept in mind when the stakeholders sit down to refine the statute further. We offer our comments on some of the important provisions that needs to be prescribed and some that needs to be proscribed along with our own set of recommendations. What follows are some of the important provisions that the law makers intend to change and our views on them. This is just a primer focusing on the context, need, improvements and significance along with a critical assessment of some areas of missed opportunities to reform the statute. Let us dive into the subject to understand the salient features of the Bill. This Bill proposes 107 amendments that bridge the gap between traditional compliance and modern digital-first business practices. At its core, the 2026 Bill is a testament to the government’s shift toward “trust-based governance.” By doubling the thresholds for small companies, institutionalising hybrid meetings, and shifting dozens of criminal offences to an administrative penalty regime, the legislation seeks to replace the “Inspector Raj” with a culture of facilitation. For the professional community, from Company Secretaries and Accountants to Founders and Board of Directors, a statutory Bill is not just a regulatory update; it is an integral part of an ongoing structural transformation. Below are some of the important amendments proposed. Please keep in mind that these are still proposals till such time they are cleared by the JPC after their debates and discussions. Right now, the stakeholders have a window available to present their views to the JPC on the draft amendments. Here are our views on the proposed Bill with our suggestions and the rationale behind them. Our views are given below on both the Companies Act 2013 and the Limited Liability Partnership Act 2008. We also tried to imagine what could be some of the reservations of the JPC while implementing them.
- Amendments to The Companies Act 2013:
Section 2(85): The Bill seeks to change the definition of a “Small Company” by doubling the ceiling limits in the definition. In the present limit prescribed, to be qualified as a Small Company, is that the paid-up capital of the company should be less than or equal to ₹10 Crores. The Bill seeks to amend this limit to ₹20 Crores. Similarly, the present threshold for turnover of Small Companies is ₹100 Crores. The Bill seeks to raise it to ₹200 Crore.
Comments: This would fundamentally change the way we as a society do business. A large number of corporate entities would heave a sigh of relief and rightly so. For a small company having to go after compliance requirements is always at the cost of the unit’s prime purpose of attaining sustainable turnover. In one stroke this measure would go a long way to free up enormous amount of time and energy at the disposal of the entrepreneur for productive purposes.
Reservations: The main concern is likely to be the sudden jump in the amounts up to which the companies in the mid-sized category may get lighter rules than they do now. Whatever the reality is, the perception is likely to be a skeptical response. The JPC may test whether the new limits are too generous and whether these limits should be made applicable in a step-by-step approach.
Section 21: Certain declarations forming part of filing applications have to be authenticated by key managerial personnel and sometimes requiring Board resolutions too. As part of the simplification process, some of these applications can be allowed to be authenticated though self-declarations.
Comments: Some of these are routine declarations, still requiring elaborate authentication process. This is sought to be done away with through self authorisations. This is a standard deregulation move. It cuts paperwork and speeds up filings especially in routine compliance matters.
Reservations: Going forward, it could be a debatable issue despite being a routine procedure. Self-declarations can be misused if enforcement turns out to be weak. The JPC may seek higher penalties for false-declarations and seek verification safeguards.
Section 62(1)(b): In the area of employee compensation framework, the law is sought to be changed to modernise it by adopting some evolved compensation structures and here the amendments are to go beyond the simple Employee Stock Options to modern equity linked compensation packages practiced in other countries.
Comments: Instruments such as Restricted Stock Units (RSU) are employee compensation mechanisms where company shares are granted to employees when the employees meet specific vesting conditions. Their values are treated as part of salary for taxation purposes. So is the case with Stock Appreciation Rights (SAR), which are rights provided to employees with a financial incentive linked to stock price performance of the company.
Reservations: It is unlikely to meet heavy objections from the JPC as no additional liability for the company is sought to be created and what is more it also gives the impression that we are following global compensation packages.
Section 68: Buyback provisions are sought to be made more flexible for specified class of companies. Companies can now undertake two buy-back offers per year (up from one) provided there is a six-month gap between the closure of the first and the opening of the second.
Comments: This provision increases capital-management flexibility and may help companies with surplus cash, especially in mature businesses. It also provides flexibility in structuring capital.
Reservations: The concern for the JPC may arise from the fact that buy-backs can be used to favour certain shareholders or manipulate the existing capital structure. The JPC, therefore, could ask for tighter limits, disclosures and class-based safeguards.
Section 96: Greater allowance for digital/hybrid AGMs and electronic participation, while preserving periodic physical meetings.
Comments: This step seeks to modernise corporate governance and reduces logistical friction, especially for shareholders located in dispersed locations.
Reservations: Some may worry that too much reliance on virtual meetings weakens real shareholder engagement and oversight. The JPC could enquire whether hybrid meetings are sufficient for minority shareholder participation.
Sections 117, 118 & 124: Several technical faults would now have civil penalty/e-adjudication. They are thus sought to be shifted from criminal prosecution basket.
Comments: This provision is central to the Bill’s basic philosophy. It reduces fear of criminal liability for mundane procedural mistakes and also makes enforcement more proportionate to the transgressions noticed.
Reservations: Critics might point out that this dilution of penalties would soften deterrence and encourage compliance-complacency. The JPC, therefore, could seek a sharper line between genuine technical lapses and repeat or intentional defaults.
Sections 132, 140,141,143 and 147: These are Sections dealing with audit, auditor and above all the need for transparency. In the amended sections the power of NFRA have been enhanced. The current provisions regulate auditors to a limited extent. This is set to change in the proposed Bill which expands the powers of NFRA to include investigation of misconduct, higher penalties and mandatory continuous reporting.
Comments: The amended Sections have much sharper teeth. An auditor must file detailed reasons with NFRA if he resigns before his term is completed. New provisions permit firms to have multidisciplinary qualifications. The Bill introduces new audit-related provisions by strengthening NFRA’s role in tightening auditor eligibility, expanding reporting duties and creating a framework for IFSC auditors.
Reservations: The JPC is expected to endorse stronger oversight but will likely probe costs, overlaps and enforcement capacity before clearing these changes.
Sections 141,148,204:Formation of Multi-Disciplinary Partnerships: This demand from professional bodies like Chartered Accountants and Company Secretaries had been in the offing for some time.
Comments: A firm can be appointed as Chartered Accountant, Cost Auditor or Secretarial Auditor in its firm’s name if the majority of practicing partners are qualified. Strict guardrails have to be put in place.
Reservations: JPC is expected to clear this proposal as it was in discussion for a long time on this and is generally perceived to be a big support to industrial growth.
Sections 164, 165 & 167: Strengthening Corporate Governance being one of the prime objectives of the statute these Sections assume supreme importance. Penalisation under Sec 188 now triggers disqualification of Directors. Acting as auditor, valuer or insolvency professional in the preceding three financial years or current financial year disqualifies a person from directorship. A new provision of a person being found “fit and proper” has been initiated. The government is empowered to specify lower directorship limits for specific classes.
Comments: Under these Sections the Act provides sufficient freedom to the Board to decide on the acceptability of a person as a Director. In fact, disqualification under Section 164 (2) forces the vacation of office across all companies after six months. This Section is critical from a corporate governance point of view.
Reservations: It is extremely unlikely that the JPC would relent on any of the guardrails provided in them. In fact, from a governance point of view, additional conditions can come from JPC.
Section 134: This Section mandates that the Auditor must explain/comment on every audit remark regarding financial transactions, adverse observations and account maintenance. This Section also mandates that the audit committee should explicitly state reasons for any Audit Committee recommendation getting rejected.
Reservations: It is extremely unlikely that the JPC will have a different view on this all important provision on corporate governance.
Section 149: With every introduction of amendments, the onerous responsibility on the independent Director is getting stricter for obvious reasons. These sets of amendments goes to increase their responsibility. ID or his relatives cannot be KMP/employee in preceding three financial years. Eligibility criteria must be actively maintained.
Comments: These Sections seek to bring strict and desirable corporate governance practices and is in line with the intention of the government in strictly adhering to the best governance practices.
Reservations: The role of Independent Director being what it is, in the new governance structure in the corporate world provisions of this nature are more normal than otherwise.
Section 185: A company cannot directly or indirectly advance loans to its directors or to entities in which directors are interested. This prevents misuse of corporate funds and conflicts of interest.
Comments: In line with broad underlying principles of the new enactment, this is a natural corollary.
Reservations: This would pass the muster with the JPC as it is totally in line with the overall tenor of the new legislation.
Section 186: A company cannot make loans, investments or provide guarantees/security exceeding 60% of paid-up share capital, free reserves and securities premium or 100% of free reserves and securities premium, whichever is higher, without shareholder approval.
Comments: This provision is broadly in line with the overall corporate governance principle underlying this legislation.
Reservation: This provision is also expected to be passed sans discussion with the JPC.
Sections 230, 231 & 232: Shareholder and creditor approval thresholds in specified merger/amalgamation cases are reduced from 90% to 75%.
Comments: This makes restructurings quicker and more commercially workable. It is especially useful for group simplification and internal reorganisations.
Reservations: Here, minority protection is an obvious concern. The JPC could legitimately ask whether 75% is enough in related-party or ‘squeeze-out’ situations where majority shareholders (usually 90–95%+) force minority shareholders to sell their stakes, effectively taking full control of the company and whether provisions for dissenting stakeholders could expect to get better safeguards.
Sections 206 to 229: Provisions relating to Inspection, Inquiry and Investigation as contained in Chapter XIV stand expanded including powers on investigation procedure and advisory/censure/warning directions.
Comments: This is the counterbalance to decriminalisation. The government is easing routine compliance while strengthening high-level audit and accounting oversight.
Reservations: Some may question whether expanded NFRA powers overlap with existing regulators or create procedural ambiguity. The JPC may also ask for clearer standards on NFRA actions and how they would avoid regulatory encroachment.
Sections 132: The National Financial Reporting Authority (NFRA) was created under Section 132 of the Companies Act, 2013. Though the Bill retains the section, it adds Sections 132A to 132K to build a much larger NFRA framework with commensurate responsibilities cast on NFRA. The existing provisions allow NFRA to mainly oversee audit quality, accounting standards and professional misconduct in prescribed classes of companies and auditors.
Comments: It is clear from the Bill that the proposed provisions are not merely tweaking of NFRA – it is structurally redesigning the architecture of the regulator itself. With this NFRA becomes a more active regulator with expanded supervision, reporting, inquiry, penalty and direction powers. The shift is from a largely supervisory body to a stronger enforcement regulator.
Reservations: The JPC is likely to focus on the following four dimensions:
- whether Sections 132C, 132J and 132K would give too wide a spectrum of discretionary powers to NFRA.
- whether inquiry and penalty powers are balanced with adequate hearing and appeal safeguards.
- whether the new regime will create tension with ICAI and existing disciplinary structures.
- whether the government’s power to issue directions or supersede NFRA would weaken its true regulatory independence.
The Bill allows NFRA to function with greater institutional strength but also keeps the Central Government’s policy-direction role in the background. Consequently, the design is not total independence; it is stronger operational power with the ultimate governmental oversight.
Section 455: Dormant companies will now be required to file returns exclusively through digital platforms ensuring transparency and reducing paperwork. With this the Registrar of Companies (RoC) will have greater powers to review and revoke dormant status if misuse is detected (e.g., shell company activity).
Comments: With the number of companies increasing, more number would get entered in the records of MCA including those which may not survive for long.
Reservations: Though it is difficult foresee what could be the stand of JPC on this issue.
While the Bill is a massive leap toward in ease of doing business, it has faced some pushback on the issue of “excessive delegation” of powers to the executive (the “as may be prescribed” clauses). The JPC’s report, expected by the Monsoon Session, will be crucial in determining how these powers are balanced with adequate parliamentary oversight.
- The Limited Liability Partnership Act 2008:
The Corporate Laws (Amendment) Bill, 2026, represents a significant leap in the evolution of the Limited Liability Partnership (LLP) framework in India along with that of the Companies Act. The Amendment Bill fundamentally shifts the Limited Liability Partnership (LLP) Act, 2008, toward a “digital-first” and “global-centric” model. While the 2021 amendments focused on decriminalisation, the 2026 proposals seek to introduce structural changes intended to align LLPs with modern investment needs. This is important in today’s better integrated world. The following are the salient features in the Bill:
Section 2 (1): There was no separate statutory subcategory for IFSC based LLPs in the existing Act.
Comments: The Bill adds definitions for “International Financial Services Centre (IFSC),” “International Financial Services Centres Authority (IFSCA),” and “permitted foreign currency.”
Reservations: It remains to be seen if there a risk of regulatory overlap between IFSC Authority and MCA. Clarity should be forthcoming on this issue of jurisdiction sooner than later.
Section 11: Simplified incorporation procedures with reduced documentation burden under the Registrar of Companies are envisaged.
Comments: The Bill enables incorporation of IFSC LLPs under IFSCA, with flexibility for handling foreign currency contributions. To make India a global financial hub, LLPs and companies operating in International Financial Services Centres (IFSCs) will be permitted to maintain their share capital and accounts in permitted foreign currencies. Additionally, a new framework allows specified trusts (like AIFs) to convert seamlessly into LLPs.
Reservations: Once the concept is accepted, these modalities may not create problems before the JPC.
Section 13: LLPs must maintain their registered offices in India.
Comments: IFSC LLPs may maintain their registered offices within IFSC the jurisdiction thereby easing cross-border operations.
Reservations: Once the concept is accepted, these modalities may not create problems before the JPC.
Section 74: Procedural defaults like late filings and random omissions would be treated as simple offences.
Comments: Decriminalisation of minor defaults attract civil penalties instead of criminal liability in line with the government philosophy.
Reservations: Once the concept is accepted, these modalities may not create problems before the JPC.
Section 76: The Registrar of Companies would have an oversight of these provisions.
Comments: IFSC LLPs regulated by IFSCA under RoC should get the jurisdictional issues.
Reservations: Once the concept is accepted, these modalities may not create roadblocks before the JPC.
With these streamlining steps multiple filings and required timelines can be adhered to by the LLPs. Streamlined filings would also reduce the burden for startups and small LLPs. Overall, these provisions are unlikely to be objected to by the JPC primarily because of ease of doing business and decriminalisation and reduced compliances especially benefiting startups and SMEs. IFSC LLP provisions would be seen as a progressive step to attract international investors and position India as a financial hub. However, JPC may question whether IFSCA has adequate resources and expertise to regulate IFSC LLPs effectively. JPC also may insist on tighter safeguards in monitoring compliance with FEMA and RBI norms. One can expect a spirited debate on the issue of decriminalisation on the premise that it could weaken deterrence against habitual defaulters. In the end, the important takeaways would be three-fold:
- Startups and small businesses will benefit from reduced compliance costs and faster incorporation.
- The Regulators will need to strengthen IFSCA’s capacity to oversee IFSC LLPs effectively.
- In the final reckoning, balance between ease of doing business and safeguarding governance standards will be the central focus for the law makers.
Regulations Redefined for the Future:
The above Bills, no doubt, comes with a lot of goodies; but it still leaves much to be desired. Those who were looking for the proverbial silver bullets are sure to be disappointed.
- First and foremost is the glaring absence of reforms when it comes to a comprehensive group and holding company structures. The Bill still does not adequately address group insolvency, cross‑border holdings and pyramid structures. These are issues that routinely arise in modern conglomerates. A more coherent group‑level governance framework should be put in place when we try to future-proof any legislation.
- The liability architecture of Independent Directors could have been properly laid out. While penalties are reduced, the conceptual uncertainty around independent director’s liability remains unresolved. Clearer statutory safe harbours beyond case‑laws could have strengthened confidence level across the board.
- Another critical area where more forward-looking provisions would have made an impact is in the area of impact assessment of CSR initiatives. The Bill adjusts CSR thresholds but does not introduce outcome‑based or impact‑linked CSR reporting thereby missing an opportunity to move CSR from routine expenditure‑tracking to more important social performance.
- Excessive delegation to the Executive is fraught with enormous danger. A significant portion of the reform’s impact is deferred to subordinate legislation (rules and notifications). Overly prescriptive rules that would follow could dilute the intended legislative liberalisation.
- While the Bill proposes jurisdictional streamlining, there is no structural reform on how the NCLT working could be better administered. One of the weakest links in corporate dispute resolution is in the area of capacity, appointments and timelines of NCLT.
The proposed amendments reflect a maturing phase of Indian corporate laws, where the emphasis is increasingly on trust‑based regulations, proportionality when it comes transgressions and economic realism rather than dependence on prescribing unrealistic deterrence through criminal laws. However, the success of this reform will depend not merely on statutory text, but on rule‑making discipline, regulatory restraint, and institutional capacity, areas where India’s corporate ecosystem still continue to face challenges. If the JPC addresses some of the structural gaps noted here, the amendments could mark a transformative step in aligning India’s Companies Act with 21st‑century corporate realities. A caveat is due here. While the proposed legal amendments have generated considerable discussions, a full and substantive debate will only be possible once the Bill is passed by the Parliament and enacted into law.”
Thank you.
