The Centre has proposed sweeping amendments to the Companies Act to give firms greater flexibility in capital management, simplify merger procedures, and ease compliance norms, as part of its broader push to improve the ease of doing business.
Finance Minister Nirmala Sitharaman on Monday introduced the Corporate Laws (Amendment) Bill, 2026 in the Lok Sabha. The legislation will come into effect after approval by both Houses of Parliament.
A key proposal allows certain categories of companies to undertake up to two share buybacks in a financial year, compared with the current limit of one. A minimum gap of six months between buybacks has been prescribed.
The move is expected to offer companies with strong cash flows an efficient route to return surplus funds to shareholders, while also giving promoters greater flexibility in managing capital structure.
The bill proposes to decriminalise a wider set of corporate offences by replacing criminal liabilities with civil penalties. This is aimed at reducing litigation risks and improving the overall compliance environment.
Industry experts say the changes align India’s corporate framework more closely with global best practices and could enhance investor confidence.
The proposed amendments also seek to ease compliance norms for Alternative Investment Funds (AIFs) by allowing them to be structured as limited liability partnerships (LLPs).
This is expected to provide clearer governance structures and better-defined liability frameworks for such investment vehicles.
The government has proposed simplifying fast-track merger procedures, especially for transactions where shareholders holding at least 75 percent in both companies approve the deal.
The streamlined process will cover mergers involving:
holding companies and subsidiaries
small companies
startups
Applications can be filed with the tribunal having jurisdiction over the transferee company, reducing procedural complexity.
However, companies undergoing liquidation under insolvency proceedings will not be allowed to pursue mergers or compromise arrangements.
The bill also seeks to strengthen the powers of the National Financial Reporting Authority (NFRA).
Key proposals include:
expanding the definition of “professional misconduct” for auditors
stricter enforcement of regulatory orders
provisions for penalties, debarment, and even imprisonment for non-compliance
The changes are aimed at improving audit quality and tightening oversight in the corporate sector.
Overall, the proposed amendments signal a calibrated effort by the government to balance regulatory oversight with operational flexibility, as India looks to make its corporate environment more agile and investor-friendly.
