India’s corporate regulatory landscape continues to evolve in response to the twin objectives of enhancing ease of doing business and strengthening governance standards. The Companies (Amendment) Bill, 2026 marks another important milestone in this trajectory, building upon earlier reforms to the Companies Act, 2013.
A key highlight of the Bill is the continued decriminalisation of minor and technical defaults. By reclassifying several offences from criminal to civil in nature, the legislation reduces the risk of punitive action for procedural lapses while preserving deterrence through financial penalties. This shift reflects a broader policy intent to foster a more trust-based regulatory environment without diluting compliance expectations.
The Bill also introduces significant measures aimed at simplifying compliance procedures and promoting digital governance. Provisions enabling electronic filings, virtual shareholder meetings, and the use of self-declarations in place of affidavits are likely to reduce administrative burdens and transaction costs. These changes are particularly relevant in an increasingly digitised business ecosystem.
Another notable reform is the expansion of the definition of “small companies” through enhanced thresholds for paid-up capital and turnover. This move is expected to widen the ambit of companies eligible for regulatory relaxations, thereby supporting the growth of startups and emerging enterprises.
The comprehensive comparative analysis of the key proposed amendments under the Companies (Amendment) Bill, 2026 vis-à-vis the corresponding provisions of the Companies Act, 2013. This comparison systematically highlights the nature and scope of the changes, identifying areas of continuity, modification, and reform, with the objective of providing readers a clear and structured understanding of how the proposed amendments seek to reshape the existing corporate regulatory framework.
Sr. no. |
Section |
Heading |
Existing provision |
Proposed Amendment |
Impact |
1 |
Section 2(85) |
Small company |
The company will be considered as a Small Company having upper limit of Paid up capital of INR 10 crore and turnover of INR 100 crore |
“Small company” qualifying conditions expanded materially (upper limit of paid-up capital increased from INR 10 crore to INR 20 crore and upper limit of turnover increased from INR 100 crore to INR 200 crore |
enabling them to avail themselves
|
2 |
Section 184(1) |
Disclosure of Interest by Director (Form MBP-1) |
Director disclosures of interest in Form MBP-1 was required at the first board meeting of the financial year or upon any change in status of Directorship |
Director disclosures of interest in Form MBP-1 no longer required on an annual basis. Directors are required to disclose their interests only upon any change therein |
Reduces compliance burden as
|
3 |
Section 173(5) |
Board Meetings |
OPC, small company and dormant company shall conduct at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days |
Board meeting requirements further eased for small / one-person / dormant companies (i.e., one meeting in a calendar year instead of every half year and no minimum gap between meetings) |
Significantly reduces compliance burden and administrative cost |
4 |
Section 96 & 100 |
AGM and EGM (Virtual/Hybrid Meetings) |
Standard law requires physical AGMs; EGMs via video are restricted. |
Expressly allows AGMs and EGMs via physical, virtual, or hybrid modes. |
Promotes digital participation and reduces logistical barriers. |
5 |
AGM |
Standard law requires physical or virtual AGMs |
Minimum physical AGM safeguard: Every company must hold its AGM in physical mode at least once every three years |
Retains periodic in-person shareholder interface |
|
6 |
Notice for convening EGM |
Minimum 21 days notice required for general meetings |
Allows 7 days notice for wholly virtual EGMs. |
Enables quicker shareholder approvals for time-sensitive matters |
|
7 |
AGM/EGM |
NA |
Member requisition rights for hybrid mode: Where members meeting the requisition threshold require a hybrid meeting, the company must hold the meeting in hybrid
|
Strengthens shareholder rights and
|
|
8 |
Section 20 & 12A |
Service of Documents |
Insertion of new section 12A |
Prescribed classes of companies (likely including listed and unlisted public companies meeting certain thresholds) must maintain official websites and email addresses, and may serve specified documents to members exclusively through electronic mode. Electronic delivery will constitute valid legal compliance. |
Establishes digital readiness & reduces physical dispatch costs |
9 |
Section 135 |
CSR Threshold |
Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee |
CSR applicability threshold linked to net profit proposed to rise from INR 5 crore to INR 10 crore |
Focuses the CSR regime on companies with a higher capacity to spend |
10 |
Timeline to transfer unspent CSR amounts |
Timeline to transfer unspent CSR amounts for ongoing projects to the Unspent CSR Account is 30 days from the end of the relevant financial year |
Timeline to transfer unspent CSR amounts for ongoing projects to the Unspent CSR Account extended from 30 days to 90 days from the end of the relevant financial year |
This relaxation would reduce
|
|
11 |
CSR Committee constitution |
Where the amount to be spent by a company does not exceed fifty lakh rupees, the requirement for constitution of the CSR Committee shall not be applicable |
CSR Committee not required to be constituted, up to higher spend threshold, i.e., changed from INR 50 lakh to INR 1 crore |
Reduces compliances |
|
12 |
Section 203A |
KMP Resignation Rules |
New section inserted |
The Bill proposes that whole-time KMPs who are not directors may resign by giving written notice to the company. If the company fails to acknowledge, the KMP may directly submit the notice to the Registrar. |
Intended to protect KMPs from liability arising from the company’s inaction. |
13 |
Section 68 |
Buyback of shares |
Increased the scope of the provision |
Buy-back eligibility expanded to include shares issued under employee stock options, sweat equity and schemes linked to the value of share capital |
Aligns buy-back provisions with
|
14 |
Limits prescribed to be increased for the specific class of companies |
Empowerment to prescribe higher buy-back limits for specified classes of companies beyond the existing 25% cap |
Introduces flexibility |
||
15 |
NA |
Clarification that the 25% (or prescribed) limit for equity share buy-back is to be computed with reference to total paid-up equity capital of the financial year |
improves certainty in structuring
|
||
16 |
no offer of buy-back shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy-back |
Permission for prescribed classes of companies to undertake up to two buy-back offers in one financial year, subject to a minimum six-month gap |
Enhances capital management |
||
17 |
Declaration of solvency mandatorily required to be verified by an affidavit |
Removal of the requirement to verify declaration of solvency by affidavit |
Simplifies procedural compliance and Compliance cost |
||
18 |
Section 4 |
Memorandum |
Section 4(5)(ii)(a) provides that where, after reservation of a name, if it is found that the name was applied for by furnishing wrong or incorrect information, then, if the company has not been incorporated, the reserved name must be cancelled. The person making an application is liable to a penalty which may extend to Rs 1,00,000 |
The Bill proposes to amend Section 4(5)(ii)(a) of the Act to provide for a fixed penalty amount of Rs 50,000 |
Reduced burden |
19 |
Section 43A |
Issuance and Maintenance of Share Capital in Foreign Currency for IFSC Companies |
Presently, the Companies Act, 2013, does not include specific provisions to enable companies to prepare accounts or financial statements in foreign currencies. |
To provide for requirements relating to the issuance and maintenance of share capital, preparation and maintenance of books of account, etc., filing, submitting or delivering documents by companies set up and incorporated in the IFSC jurisdiction in a permitted foreign currency. |
Ease of doing Business |
20 |
New section inserted |
The Bill also proposes to clarify that such companies must pay fees, fines and penalties under the Companies Act and the rules made thereunder in Indian rupees. |
aligning their operations with global business practices & reduces currency conversion complexities |
||
21 |
Section 62 |
RSUs and SARs Recognition |
Earlier RSUs and SARs not included |
Employee compensation beyond stock options (ESOPs) to include Restricted Stock Units (RSUs), Stock Appreciation Rights (SARs), and other schemes linked to the value of share capital in section 62 and section 68 |
Formal recognition provides legal certainty |
22 |
Section 149 |
Disqualification for Independent Directors |
Under the existing law, an individual is disqualified from being appointed as an independent director if they or any of their relatives have, in the 3 financial years immediately preceding the year of appointment, held the position of a Key Managerial Personnel (KMP) or have been an employee of the company, its holding company, subsidiary, or associate company. |
The Bill proposes extending the disqualification of independent directors to include prohibited employment or professional associations during the current financial year, in addition to the preceding 3 years. |
This aims to ensure that directors maintain genuine independence at all times. |
23 |
an individual is disqualified from being appointed as an independent director if, in any of the three financial years immediately preceding the year of appointment, they have been an employee, proprietor, or partner of either of the any legal or consulting firm that has conducted transactions with the company, its holding, subsidiary, or associate company amounting to 10% or more of the firm’s gross turnover. |
The bill proposes to reduce the threshold for disqualification based on transactions with professional firms, such as legal or consulting entities. |
To strengthen the impartiality of independent directors by minimising conflicts of interest. |
||
24 |
No person shall be appointed as a director of a company unless he has been allotted the Director Identification Number |
The Bill proposes that a Director Identification Number (DIN) must remain valid and active not only for appointment but throughout the tenure. A deactivated DIN would result in disqualification. |
Ensure continuous traceability and compliance for directors |
||
25 |
Section 161 |
Tenure for Additional Directors |
The AOA may confer on its Board of Directors the power to appoint any person, other than a person who fails to get appointed as a director in a general meeting, as an Additional Director at any time who shall hold office up to the date of the next annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier. |
The Bill proposes limiting the tenure of additional directors to the earlier of the next general meeting or three months from the date of appointment. |
prevent temporary appointments without shareholder approval |
26 |
Section 164 |
Conflict of Interest Restrictions |
New clause inserted |
to disqualify directors who have recently acted as auditors or valuers, addressing the risk of conflicts of interest and ensuring that those with prior professional relationships do not influence company decisions. |
For good corporate governance |
27 |
Fit and Proper Person Requirement |
New clause inserted |
to include the “fit and proper person” requirement for appointment as a director. |
a qualitative measure beyond technical eligibility |
|
28 |
Section 166 |
Penalties for Breach of Directors’ Duties |
New sub-section inserted |
Under this provision, if a director fails to comply with the requirements of this section, except for those specified under sub-section (5), they shall be liable toa penalty of Rs. 5 lakh in the case of a listed company and Rs. 2 lakh in the case of any other company. |
to reduce negligence and misconduct |
29 |
Section 186 |
Revision of Penalties for Loans and Investments |
If a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees. |
It is proposed that companies violating sub-sections (9) or (10) of Section 186 would pay fines of Rs. 1 lakh, with an additional Rs. 500 per day for continuing violations, up to Rs. 5 lakh. Officers responsible would pay Rs. 25,000, with Rs. 200 per day for continuing defaults, capped at Rs. 1lakh. |
To ensure proportionate and enforceable compliance |
30 |
Section 148 |
Legal Recognition of Cost Accounting Standards |
New clause inserted |
The Bill proposes to insert this new sub-section to empower the Central Government to prescribe cost accounting standards based on recommendations from the Institute of Cost Accountants of India. |
aims to ensure consistency and reliability in cost audits |
31 |
Still, there is no explicit assignment of responsibility to Key Managerial Personnel (KMPs), such as the Managing Director, the Whole-time Director in charge of finance, or the Chief Financial Officer |
Under the proposed amendment, Key Managerial Personnel, such as the Managing Director, the Whole-time Director in charge of finance, the Chief Financial Officer, or any officer entrusted with such responsibility by the Board, would be directly responsible for compliance with the cost audit provisions. |
Proposed penalties for non-compliance include Rs. 5 lakh for listed companies and Rs. 50,000 for other companies. |
||
32 |
New sub-section inserted |
In case of default in the appointment of a Cost Accountant by the Board and in the determination of remuneration by the members, the company shall be liable to a penalty of Rs. 10,000, and, in case the default continues, an additional penalty of Rs. 100 is imposed for each day during which the default persists, subject to a maximum of Rs. 2 lakh. Similarly, every officer of the company who is in default is also liable to a penalty of Rs. 10,000, with a further Rs. 100 per day after the first day of continuing default, subject to a maximum of Rs. 50,000. |
ensure compliance |
||
33 |
Section 128 |
Penalties for Non-compliance with Financial Record-keeping Requirements |
fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees |
Instead of a variable fine, a fixed penalty structure is introduced, with listed companies facing a penalty of Rs. 5 lakh and other companies facing a penalty of Rs. 50,000. |
ensure compliance |
34 |
fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees |
for serious violations relating to the maintenance and preservation of financial records, significantly higher penalties are proposed. Listed companies may be liable for penalties up to Rs. 25 lakh, while other companies may face penalties up to Rs. 5 lakh. |
ensure compliance |
||
35 |
Section 147 |
Penalties for Contravention of Provisions Related to Auditor |
penalties are mostly expressed as a range of fines, which can create inconsistency in enforcement. |
The company will be liable to pay Rs. 1 lakh, with an additional Rs. 500 for each day of continuing default, up to a maximum of Rs. 5 lakh, while the officer in default will pay Rs. 25,000, with Rs.200 per day for continuing default, up to a maximum of Rs. 1 lakh. |
ensure compliance |
36 |
Section 132A |
Intimation to NFRA Regarding the Appointment ofAuditors in Specified Companies |
New section inserted |
Section 132A requires that certain auditors and audit firms must register their details with the National Financial Reporting Authority (NFRA) before being appointed under Section 139 for specified companies or bodies. |
Auditors must also file prescribed documents, returns, or information with the NFRA within the specified time and manner. In case of failure to comply with these provisions, a penalty of at least Rs. 25,000, with an additional Rs. 500per day for continuing default, up to a maximum of Rs. 25 lakh. |
37 |
Section 233A |
Disposal of Pre-2013 Shareholding Arrangements |
new provision inserted |
Under the proposed rules, companies are required to dispose of these shares within 3 years. Failure to comply with these requirements will result in cancellation of the shares and a penalty of Rs. 10,000 for each day until the issue is resolved. |
|
38 |
Section 242 |
Removal of Certain Tribunal Powers |
By omitting Section 242 regarding the Tribunal’s powers, the Bill aims to streamline administrative decision-making and reduce reliance on judicial intervention. The logical intention is faster resolution of corporate matters and reduced procedural delays. |
omitted |
faster resolution of disputes |
39 |
Section 134 |
Audit Committee Disclosures |
New clause inserted |
Mandatory disclosure are proposed to disclose and provide comments on the audit qualifications, adverse remarks. Also, the board report shall disclose the composition of the Audit committee and the comments or observations not accepted by the board |
good corporate governance |
40 |
Section 144 |
Restriction on Non-Audit Services by the Auditor |
New clause inserted |
Under the proposed framework, an auditor or audit firm of prescribed classes of companies shall be restricted from providing, directly or indirectly, any non-audit services whatsoever to the audited company or its holding company or subsidiary.
|
tightening of the auditor independence framework |
In conclusion, the Companies (Amendment) Bill, 2026 represents a calibrated reform effort that seeks to harmonise regulatory efficiency with corporate accountability. While its success will depend on effective implementation, the proposed changes signal a clear commitment towards creating a more facilitative and globally competitive business environment in India.
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