Corporate Laws (Amendment) Bill, 2026 — what it means for your company, and how to prepare
Imagine telling a client that from next year they probably will not collect MBP-1 forms from every director each April, that board meetings could drop to one a year, that the AGM could be held over video permanently, and that a late filing would bring a penalty notice rather than a criminal summons. That is the world this Bill is designing. It is not there yet.
The Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026) was introduced in the Lok Sabha on 23 March 2026 and referred the same day to a 31-member Joint Parliamentary Committee. The JPC took submissions from the Ministry of Finance and the National Financial Reporting Authority on 24 June 2026, and its report is expected by the Monsoon Session.
Nothing in this article is in force. Individual clauses may be altered, dropped or added before enactment, and once enacted, different provisions will be brought into effect on different dates notified by the Central Government. Apply current law. Prepare for what is proposed.
The short version
- 107 clauses, amending both the Companies Act 2013 and the LLP Act 2008 — built on the Company Law Committee report and the 2025 High-Level Committee on Non-Financial Regulatory Reforms.
- Two tracks at once. Procedural defaults move from criminal offence to civil penalty. Governance failures get tighter consequences. Reading only the relief half is the mistake to avoid.
- Small company limits proposed to double again — paid-up capital ₹10 crore to ₹20 crore, turnover ₹100 crore to ₹200 crore, on top of the increase already notified in December 2025.
- Director disqualification gets stricter, not looser — the non-filing trigger drops from three consecutive years to two.
- Do not wait for relief. Decriminalisation is prospective. A default that exists today stays a criminal offence today, and compounding under Section 441 remains the route to clear it.
The idea behind the Bill: two-track enforcement
Unlike the 2025 changes, which were operational — new portal formats, new form fields, enhanced Board Report disclosures — this Bill is about how compliance is designed in the first place.
It draws a deliberate line between two kinds of non-compliance. Procedural mistakes — late filings, missed documentation, technical lapses where nobody was harmed and no fraud occurred — should carry civil financial penalties determined by an adjudicating officer, not the shadow of criminal prosecution. Governance failures — fraud, related-party abuse, audit manipulation, director self-dealing — should carry tougher consequences than they do now.
Both directions are in the same Bill, and the second one is easy to miss in the coverage.
Defaults that presently carry imprisonment risk move into a civil penalty framework. An adjudicating officer determines the penalty rather than a court. The company pays and moves on — no prosecution, and no personal criminal record for directors or the company secretary. The decriminalised list includes contravention of Rules, failure to furnish information or documents required by the Registrar, violations of the books-of-account requirements, and failure to comply with a Registrar's requisition.
Independent director eligibility is tightened. Director disqualification for non-filing triggers after two years rather than three, with a new ground added for related-party transaction penalties. NFRA gains corporate status and enforcement powers. Auditors face registration and reporting obligations. Governance failures get fewer second chances than they do today.
The practical implication is a change of posture. Small procedural defaults should become cheaper and faster to resolve once the Bill is in force. Governance defaults — a missed related-party approval, a compromised independent director qualification, an audit quality failure — will meet stronger institutional consequences than they do now.
The conversion of criminal defaults to civil penalties applies prospectively, from the date each provision is notified. Defaults that exist today remain criminal offences today. A company with outstanding annual return non-filings, unresolved charge registration delays or pending director KYC gaps should regularise now, through compounding under Section 441 — not sit and wait for the Bill to deliver automatic relief that it does not offer.
Which changes hit which kind of company
The proposals do not affect every company equally. A listed company with fifty thousand shareholders cares about virtual AGMs. An OPC cares about board meeting frequency. A GIFT IFSC company cares about foreign currency capital. This maps the Bill to entity type.
| Entity type | What applies | What does not | Action now |
|---|---|---|---|
| One Person Company | Board meetings reduced from two a year to one. Small company threshold rise, where the OPC qualifies. Decriminalisation of filing defaults. MBP-1 only on change. | Virtual AGM provisions — an OPC does not hold an AGM in the conventional sense. NFRA provisions. | Review the Articles to confirm the board meeting provisions are consistent. Older Articles specifying a quorum of two sit badly with a sole-director OPC. |
| Newly qualifying small company ₹10–20 cr capital or ₹100–200 cr turnover |
Qualifies as small under the proposed ₹20 cr / ₹200 cr limits. Four board meetings drop to one. MGT-7A instead of MGT-7. Cash flow statement exemption. Rule 9B demat exemption potentially restored. MBP-1 only on change. DIN KYC every three years. | SBO compliance under Section 90 continues regardless of small company status. Director disqualification rules still apply in full. | This is the group that gains most. Identify every client in the band now, so the compliance calendar can be switched the moment the provision is notified. |
| Growing private company above the small company limits |
Permanent virtual AGM, with one physical meeting every three years. MBP-1 only on change. DIN KYC every three years. Charge registration window extended to 180 days for prescribed classes. Two buy-backs a year for prescribed classes. RSU and SAR recognition. | Small company relaxations. CSR threshold changes may or may not bite, depending on net profit. | Review the Articles for virtual meeting permissions. Check whether the company falls in any prescribed class for dual buy-back. Map existing RSU and SAR plans. |
| Listed public company | Permanent virtual AGM — the single most valuable change where the shareholder base runs to thousands. Strengthened auditor restrictions post-tenure. Expanded NFRA oversight. Charge registration extension. Two buy-backs a year. RSU and SAR recognition. | Small company relaxations. Decriminalisation benefits are narrower — listed companies carry higher accountability by design. | The audit committee should review auditor independence in light of the NFRA expansion. Begin assessing shareholder notification and e-voting infrastructure for fully virtual meetings. |
| GIFT IFSC company | New Section 43A — share capital may be issued and maintained in permitted foreign currency, with dividends payable in foreign currency. IFSCA framework for LLP-AIFs. Strengthened NFRA oversight of IFSC auditors. | Small company definitions are not directly relevant. Domestic CSR obligations typically do not apply. | Review the existing capital structure and the Articles' capital clause. Assess the feasibility of converting to foreign currency share capital once IFSCA prescribes the regulations. |
| LLP | LLP-AIF framework for GIFT IFSC. Single-bench NCLT for merger and scheme applications. A framework for converting specified trusts registered with SEBI or the IFSC authority into LLPs. Enhanced designated partner accountability. Some decriminalisation of LLP Act defaults. | Companies Act small company thresholds do not apply — LLPs are governed separately. | For clients planning mergers or conversions, begin documenting under the proposed single-bench regime. Fund management clients exploring IFSC AIF structures should assess LLP-AIF feasibility. |
Your compliance checklist, before and after
Eight specific activities, the current burden, the proposed position, and whether it is relief, conditional, or a tightening. Note the one row that goes the wrong way.
| Activity | Now (July 2026) | Proposed | Type |
|---|---|---|---|
| Director interest disclosure — MBP-1, Section 184 | Every director files MBP-1 at the first board meeting of every financial year, whether or not interests changed. | Required only when a director's disclosed interests actually change. No annual mass collection. | Relief |
| Director KYC — DIR-3 KYC | Annual, by 30 September, for every DIN holder. Non-filing deactivates the DIN. | Once every three years, with an immediate filing only where address, phone, email, PAN or Aadhaar details change. | Relief |
| Annual general meeting — Section 96 | Physical AGM required for most companies; virtual permission has only ever come through temporary MCA circulars, never the statute. | Virtual AGMs permitted permanently, with a physical meeting at least once every three years. EGM notice for fully virtual meetings cut from 21 clear days to 7. | Relief |
| Board meetings — OPCs and small companies, Section 173 | OPCs: one per half-year, so two a year. Small companies: two a year. Dormant: one. | OPCs and small companies: a minimum of one board meeting per calendar year. Dormant companies unchanged. | Relief |
| CSR obligation — Section 135 | Mandatory where net profit is ₹5 crore or more in any of the preceding three financial years. CSR Committee mandatory for all applicable companies. | Profitability threshold for CSR applicability raised. CSR Committee exemption threshold proposed at ₹1 crore of CSR spend, and prescribed classes meeting prescribed conditions may be exempted from CSR entirely. | Relief |
| Charge registration — Section 77 | Within 120 days of creation — 30 days, plus a 60-day extension, plus a further 30 days on condonation. | Extended to 180 days, but only for prescribed classes of companies. | Conditional |
| Buy-back of shares — Section 68 | One offer per financial year, with a twelve-month wait before another. | Two offers per year for prescribed classes, with a minimum six-month gap between the closure of one and the opening of the next. | Conditional |
| Director disqualification — Section 164 | Triggered by non-filing of returns for three consecutive financial years. A related-party transaction penalty does not itself disqualify. | Trigger reduced to two consecutive financial years. A new disqualification ground added for a penalty under Section 188 on related-party transactions. | Tighter |
Several reliefs depend on "prescribed classes" that will only be defined by rules after enactment. Until those rules exist, the current position applies in full — including the 120-day charge registration window.
The Section 164 amendment cuts the non-filing grace period from three consecutive years to two. Any company that has not filed its annual return or financial statements for two consecutive financial years would trigger director disqualification sooner than under current law — and directors are disqualified across every company where they hold a DIN, not just the defaulting one.
Run a non-filing audit now for every director you act for. The new related-party disqualification ground is a second reason to check that Section 188 approvals are properly board-approved and minuted.
Administrative simplification — what actually gets easier
Meeting law: virtual AGMs, shorter notice, fewer board meetings
The permanent virtual AGM is the change that will save the most collective time across Indian companies. Physical AGMs mean venue booking, quorum management, attendance logistics, proxies and proxy forms — all of which disappear for a virtual meeting. The Bill proposes virtual AGMs and EGMs as a statutory right rather than a circular-based concession, with one physical meeting required every three years, and a reduction of the EGM notice period to seven days for fully virtual meetings.
There is a catch that will affect a lot of companies. The Articles of Association of most older companies were drafted before virtual meetings were contemplated. Where the Articles require a meeting "at the registered office", or require physical presence for quorum, an amendment by special resolution will be needed before the company can use the new provision. That is worth identifying across a portfolio now, so the amendments can be passed at the first general meeting after enactment rather than in a scramble.
MBP-1 and DIN KYC: the end of the annual data scramble
Two of the most tedious annual exercises change shape. MBP-1 under Section 184 would be required only when a director's interests actually change, rather than as a blanket annual collection. DIN KYC would move to a three-year cycle with event-triggered updates. Between them, that removes several weeks of chasing, reminding and late-KYC firefighting every year.
The operational consequence for a practice is a switch from a date-based system to an event-based one. Instead of a calendar entry in April, you need a register recording each director's last disclosed position and a trigger whenever a new directorship, partnership or shareholding is reported. That system is worth building before the provision is notified, not after.
Process modernisation
The Bill also proposes replacing certain affidavits required under the Act with self-declarations, and strengthens the framework around unpaid and unclaimed dividends and investor protection. Neither is headline material, but both reduce friction in routine work.
Financial flexibility — capital, buy-backs and equity compensation
Two buy-backs a year
Section 68 presently allows one buy-back offer per financial year with a twelve-month wait before the next. The Bill proposes two offers a year for prescribed classes, with a minimum six-month gap between the closure of one and the opening of another. That matters for promoter-owned companies with seasonal cash generation and for groups wanting more flexibility in returning capital.
From a compliance standpoint it also means two complete cycles — two board resolutions, two public announcements, two letter-of-offer processes, two SH-11 filings and two sets of statutory timelines. The relief is commercial, not administrative.
RSUs and SARs get statutory recognition
Section 62 governs further issues of share capital, including ESOPs, but does not expressly recognise Restricted Stock Units — where vesting delivers shares without payment of an exercise price — or Stock Appreciation Rights, where the holder receives the difference between market and grant price at vesting. Both are widely used by technology companies, MNC subsidiaries and startups, and both currently rely on interpretive stretches of the ESOP provisions, which creates ambiguity about board authorisation and shareholder approval.
Formal recognition removes that ambiguity. Companies with equity compensation plans should review their existing plan documents so the statutory language can be incorporated cleanly when it arrives.
Section 43A — foreign currency share capital for GIFT IFSC companies
A new Section 43A, applicable only to companies incorporated in the GIFT International Financial Services Centre, would allow share capital to be issued and maintained in permitted foreign currencies, with dividends payable in the same. At present even IFSC-registered companies must maintain rupee-denominated capital — an inconsistency that has made IFSC holding structures less attractive than Singapore, Mauritius or Dubai alternatives.
Fees, fines and penalties payable to Indian regulators would remain in rupees. For anyone advising on India holding structures, cross-border M&A or fund management vehicles, this makes an IFSC entity materially more viable than it is today.
Governance tightening — where accountability increases
NFRA gets real enforcement powers
The National Financial Reporting Authority was created in 2018 but has operated with limited reach. The Bill would give it corporate status — a legal entity able to hold property, contract, and sue and be sued in its own name — along with expanded powers to issue binding directions to auditors, conduct inquiries independently and impose penalties for audit quality failures without routing through the criminal courts. Auditors of public interest entities would face registration and periodic reporting obligations, and prescribed classes of auditors would be barred from providing non-audit services to the audited company and its group for three years after tenure, rather than the prohibition simply ending with the tenure.
For anyone advising listed or large private companies, the practical consequence is that the audit committee has to become more active. Scrutiny of auditor independence and the scope of non-audit services stops being purely a SEBI LODR governance matter and becomes an NFRA compliance matter.
Registered valuers under one regulator
The Bill proposes consolidating the regulation and standard-setting for registered valuers under a single authority, in place of the current position where several regulators operate independently in their own spheres. Valuers appointed for company law purposes would be engaged through a formal resolution of the audit committee rather than by management alone — a small change with a real governance effect, since valuation is where a great many related-party and capital transactions are decided.
A resignation route for company secretaries
The proposed amendment to Section 203 creates something CS professionals have wanted for a long time: a statutory resignation process that does not depend entirely on the board's cooperation. At present a CS who resigns relies on the company to file the relevant form with the Registrar. Where the company delays or disputes it, the CS can remain on record — carrying professional liability for a company they no longer serve.
The proposed route is: written notice of resignation to the company, the board takes note at its next meeting and intimates the Registrar, and if the board fails to do so, the KMP may forward the resignation with reasons directly to the Registrar. That independent right, bypassing an unresponsive or hostile board, is a significant protection.
Articles of Association — what to review before the Bill passes
Several proposals will only be usable by a company if its Articles permit the new practice. This is the preparation that can be done now, at no risk, whatever happens to the Bill.
- Virtual meeting provision. Do the Articles permit AGMs and EGMs by video conference? Where they require a meeting "at the registered office" or physical presence for quorum, a special resolution will be needed. Draft the permissive clause now.
- EGM notice period. The proposed seven-day notice for fully virtual EGMs works only where the Articles are silent on notice — defaulting to the Act — or expressly permit shorter notice. Articles specifying twenty-one clear days as a minimum will need review.
- Board meeting quorum. For OPCs and small companies moving to one meeting a year, check the quorum provisions are consistent. Older Articles specifying "one-third of total strength, minimum two" sit badly with a sole-director OPC.
- Buy-back authority. If the company might use a dual buy-back, confirm the Articles contain no restriction on frequency beyond what the Act imposes.
- IFSC capital clause. For GIFT IFSC companies considering foreign currency capital under Section 43A, the capital clause will almost certainly need amendment to permit non-rupee denomination.
Articles amendments require a special resolution at a general meeting. Identifying which ones need updating now means the resolutions can be passed at the first AGM or EGM after enactment, rather than delaying the benefit by a year.
What decriminalisation actually means for a company with pending defaults
This is the most misunderstood part of the Bill, and the misunderstanding is expensive.
- It is prospective. Decriminalisation does not erase past offences. A company that has not filed its annual return for two years has committed an offence under current law. The proposal converts that offence type to a civil penalty for occurrences after the provision takes effect. It does not retrospectively cure the existing default.
- Compounding now is the safer route. Clients carrying outstanding annual return, financial statement or charge filing defaults should initiate compounding under Section 441 now. It resolves the criminal exposure cleanly, on terms that are well understood. Waiting leaves the client exposed for the whole period before the effective date.
- Civil penalties still cost money. Decriminalisation means the adjudication is administrative rather than judicial — not that there is no consequence. Monetary penalties are imposed and must be paid, and non-payment can still escalate. The total financial exposure for a persistent default may not fall dramatically. What is removed is the criminal dimension, which for directors with a professional reputation is the part that actually matters.
The right conversation with a client today is: resolve the outstanding defaults now, through compounding or regularisation, before the framework shifts. The relief available under the current mechanism is predictable. An uncertain enactment date with an uncertain penalty calibration is not a risk worth carrying.
What is contested
It is worth being straight about this rather than presenting the Bill as settled. When it was introduced, opposition members in the Lok Sabha objected, arguing that the proposed legislation dilutes the corporate social responsibility provisions. The CSR changes — a higher profitability threshold for applicability, a CSR Committee exemption, and a power to exempt prescribed classes entirely — are the clauses most likely to be debated in the Committee.
That is the practical reason not to plan around any specific CSR outcome. A company sitting close to the current ₹5 crore net profit test should keep its CSR machinery in place — committee, policy, annual action plan and CSR-2 filing — until the enacted position is known. It is one of the clauses most exposed to change.
What this means for a Goa company
None of this is state-specific; the Companies Act is central legislation. What differs here is the shape of who benefits. A large share of Goa's corporate base — hospitality groups, Goa-IDC manufacturing units, professional services firms — sits in exactly the band that the proposed ₹20 crore and ₹200 crore limits would capture, on top of the increase already notified in December 2025. Those companies stand to move from four board meetings to one, from MGT-7 to MGT-7A, and potentially back out of the Rule 9B demat obligation.
Goa also carries a high proportion of foreign and NRI-held companies, and for those the small company route stays closed whatever the threshold — a subsidiary of any other company is excluded by definition. What is more relevant for that group is the Section 43A foreign currency capital proposal and the LLP-AIF framework, if an IFSC structure is in contemplation.
Frequently asked questions
Our Articles allow a shorter notice period. Does the Bill's 7-day EGM provision apply to us now?
No. The proposed reduction from twenty-one clear days to seven, for fully virtual EGMs, is a statutory provision in a Bill that has not been enacted. It takes effect only once the Bill is passed and that specific provision is notified.
Current law requires twenty-one clear days for most EGMs under Section 101, and a company's internal resolution cannot reduce a statutory minimum. Note also that even after enactment the shorter notice is proposed only for fully virtual EGMs — not hybrid, not physical.
A director acquired a new partnership interest. Can we wait for the "only on change" rule instead of filing MBP-1?
No — MBP-1 is due now. Section 184 currently requires a director to give notice of any concern or interest within thirty days of becoming interested, and at the first board meeting of the financial year.
The "only on change" amendment is proposed, not enacted, and in any event a newly acquired partnership interest is a change — so it would still trigger a filing under the proposed regime. There is no reading of either the current or the proposed rule under which this can wait.
Does the proposed two-year disqualification trigger apply to directors today?
No. Section 164 as it stands requires three consecutive years of non-filing. The reduction to two is proposed, not in force.
But the proposal should change behaviour now. A company in its second consecutive year of non-filing is presently outside the disqualification trigger and would be inside it under the new rule. If enactment lands before that company regularises, the position can change faster than the directors expect. Remediate at year one rather than waiting for year three under the current rule.
When exactly would a company's compliance calendar change under the new small company threshold?
Three things have to happen in sequence: the Bill must be enacted, the amended Section 2(85) threshold must be notified, and the company must then assess its status on the preceding financial year's audited figures against the new limits.
The lighter compliance applies from the financial year following qualification. It cannot be applied retrospectively to a year already closed, and it cannot be claimed before the notification date — however clearly the company would qualify.
Would a historic Section 188 penalty trigger the proposed new disqualification ground?
Probably not, but this should not be relied on without checking the final language. The proposal adds a penalty under Section 188 as a disqualification ground. Disqualification provisions in the Companies Act are ordinarily applied prospectively, which would mean penalties imposed after the provision is notified rather than those already imposed and paid.
Whether the enacted clause carries any retrospective element is a question that can only be answered against the final text. Where a director of a client company has received a Section 188 penalty, take specific advice once the Bill is enacted rather than assuming the favourable reading.
Should we hold off on CSR planning until the Bill is settled?
No — the opposite. The CSR clauses are among the most contested in the Bill; objections were raised on introduction specifically on the ground that they dilute CSR obligations, and they are a likely focus of the Committee's scrutiny.
A company near the current net profit test should keep its CSR committee, policy, annual action plan and CSR-2 filing running exactly as now. Standing down CSR machinery on the strength of a proposed threshold that may not survive the Committee would be an expensive misjudgement.
What can we usefully do before the Bill is enacted?
Four things, all of which are worth doing regardless of what happens to the Bill:
- Clear outstanding defaults through compounding or regularisation, while the current mechanism and its outcomes are predictable
- Review the Articles for virtual meetings, notice periods, board quorum and buy-back restrictions
- Run a non-filing audit across every company where your directors hold a DIN, given the tighter disqualification trigger
- Identify which companies sit in the ₹10–20 crore capital or ₹100–200 crore turnover band, so their calendars can switch the moment the threshold is notified
Get the groundwork done before it lands.
Articles review, non-filing audit, compounding of existing defaults, and identifying which of your entities would benefit from the proposed thresholds. All of it is useful whatever the Committee decides.