Proposed Amendments to the Companies Act, 2013 introduced vide the Corporate Laws (Amendment) Bill, 2026
The Corporate Laws (Amendment) Bill, 2026 aims to enhance India's corporate framework, facilitating business operations while bolstering governance. Key changes include revised definitions for small companies, financial year adjustments, video conferencing for meetings, and increased CSR compliance penalties. The bill is under review by a Joint Parliamentary Committee for detailed examination and stakeholder feedback before resubmission to Parliament.
The Corporate Laws (Amendment) Bill, 2026 marks an important milestone in the continued evolution of India’s corporate regulatory framework. It proposes a comprehensive set of amendments to the Companies Act, 2013, with the stated objective of further enhancing the ease of doing business while strengthening governance standards.
The Bill was introduced in the Lok Sabha on 23 March 2026 and has subsequently been referred to a Joint Parliamentary Committee (JPC) for detailed examination. The referral to a JPC, comprising members from both Houses of Parliament, indicates the intent for clause-by-clause scrutiny, broader consultation, and incorporation of stakeholder feedback.
Executive Summary
Key Highlights of some of the changes introduced are as follows:
Financial Year Alignment Flexibility: Central Government empowered to permit companies, upon application, to realign their financial year to end on 31 March of the following year based on commercial considerations.
Small Company Definition Revised: Thresholds enhanced with paid-up share capital increased from Rs. 10 crore to Rs. 20 crore and turnover from Rs. 100 crore to Rs. 200 crore.
Companies in IFSC: Shall issue and maintain its share capital in a permissible foreign currency.
Annual and other General Meetings: can be held now through video-conferencing or other audio-visual means.
Additional Director appointed by the BOD: to hold office upto the date of the next general meeting or up to a period of 3 months from the date of his appointment, whichever is earlier.
CSR Amendments: Net profit threshold increased to Rs. 10 crore (or as prescribed); “amount remaining unspent” replaced with “unspent amount” with transfer timeline extended to 90 days; penalty increased up to Rs. 1 crore (or as prescribed); and enabling provision introduced to exempt certain prescribed classes of companies from CSR compliance.
Board Report Enhancements: Mandatory disclosure of explanations on auditor remarks and Audit Committee composition, including reasons for non-acceptance of its recommendations.
Sub-section (1) Proviso: Director disqualified under Section 164(2) vacates office in all companies after six months from disqualification or on tenure expiry, whichever is earlier; disqualification date is when company fails compliance under Section 164(2)(a) or (b).
Sub-section (2) Penalty: Non-vacation or DIN deactivation leads to Rs. 5 lakh for listed companies and Rs. 2 lakh for others.
Section 184 Amendment: Annual disclosures by the Directors “at the first meeting of the Board in every financial year” has been omitted from sub- section (1).
Section 185 Amendment: Absolute restrictions on loans to LLPs, where Director or his relative is a Partner.
Section 164, New Clause (k): Directors must be assessed as fit and proper per prescribed criteria, which may vary by company class.
Section 167, Sub-section (2): Tenure reduced from 3 to 2 financial years for certain disqualifications; office vacates under Section 167(1) if criteria not met.
Section 139 Amendment: Audit exemption, exempting certain classes of companies, as prescribed by the Central Government, from the requirement to appoint auditors.
Section 68 (Buy-back) Amendments: The proviso has been revised to allow prescribed companies to buy back up to a prescribed such percentage of their paid-up capital and free reserves (25 or as otherwise notified). Additionally, a new proviso permits companies to undertake up to two buy-back offers in a financial year, ensuring a minimum gap of six months between closures.
Comparative Analysis of Key Amendments Proposed: Existing Provisions, Revised Proposed Framework, Business Impact and Action Points
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Sec 2(41) of Companies Act
The Central Government may allow a company or body corporate (covered under the first proviso) to follow a different financial year upon application, primarily for alignment with its holding or subsidiary company incorporated outside India.
An additional proviso has been inserted empowering the Central Government to allow, upon application (in prescribed form and manner), such companies or any other company/body corporate (on commercial considerations) to realign their financial year to end on 31st March of the following year.
Expands the scope for companies to seek approval for realignment of their financial year. Flexibility is now extended not only to companies with foreign linkages but also to other companies based on commercial considerations.
Companies intending to realign their financial year should evaluate eligibility and submit an application to the Central Government in the prescribed format.
Section 2(85) – Small Company
A company is classified as a “small company” if it satisfies the prescribed thresholds, including: paid-up share capital not exceeding Rs. 10 crore; andturnover not exceeding Rs. 100 crore.
The threshold limits have been increased as follows: paid-up share capital not exceeding Rs. 20 crore; and turnover not exceeding Rs. 200 crore.
The revised thresholds expand the scope of companies eligible to be classified as “small companies.” This enables a larger number of companies to avail benefits such as reduced compliance requirements, lesser penalties, and simplified reporting.
Companies should reassess their eligibility for classification as a “small company” based on the revised thresholds. Eligible companies may consider availing applicable exemptions and revising their compliance framework accordingly.
Non-compliance with directions (under this provision) may attract a penalty which may extend to Rs. 1,00,000.
The penalty has been revised to a fixed amount of Rs. 50,000.
The amendment reduces and standardizes the penalty amount, providing greater certainty and lowering the financial burden on companies in case of non- compliance.
Companies should note the revised penalty structure and continue to ensure compliance with name- related directions. Internal compliance teams may update risk assessments and penalty provisioning accordingly.
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Section 7(1)(b) – Incorporation of Company
A declaration is required to be submitted confirming that all requirements of the Act and rules have been complied with, typically provided by a professional (such as an advocate, chartered accountant, cost accountant, or company secretary in practice).
Clause (b) has been substituted to require: a declaration by a person named in the articles as a director, manager, or secretary of the company confirming compliance; and an additional clause (ba) requiring a declaration by a professional (advocate/CA/CMA/CS in practice), where such professional is engaged in the incorporation.
The amendment introduces dual accountability by requiring declarations from both internal company representatives and external professionals (where engaged). This strengthens compliance assurance and enhances responsibility at the time of incorporation.
Companies should ensure that declarations are obtained from both the proposed office-bearers and engaged professionals (if any) in the prescribed format. Incorporation processes and documentation checklists may need to be updated accordingly.
New Section 12A – Mandatory Communicatio n Details
No specific provision mandating companies to maintain a website, email address, or other modes of communication, or to report such details to the Registrar.
A new Section 12A has been inserted requiring prescribed classes of companies to: maintain a website, email address, and other communication modes; andintimate such details and any changes to the Registrar within the prescribed time and manner.
Introduces mandatory digital communication requirements for specified classes of companies, enhancing transparency, accessibility, and regulatory communication. It also increases compliance obligations relating to maintenance and reporting of contact details.
Companies falling under the prescribed class should establish and maintain the required communication channels. They must also ensure timely reporting of such details and any changes to the Registrar and update internal compliance systems accordingly.
Section 20(2) – Service of Documents
Companies may serve documents to members through various modes, including physical and
The proviso has been substituted to provide that: prescribed classes of companies shall serve specified documents
Introduces mandatory electronic delivery of documents for specified classes of companies, promoting digital communication and
Companies should identify applicability based on prescribed class and transition to electronic mode for serving documents.
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electronic means, as prescribed.
to members only through electronic mode, which shall be deemed sufficient compliance; and (ii) members may request delivery through a specific mode upon payment of fees as determined by the company in general meeting.
reducing administrative burden. It also provides flexibility to members to opt for alternate modes subject to payment of fees.
Systems for electronic communication should be strengthened, and policies may be updated to address member requests for alternate delivery modes and applicable fees.
Section 26(9) – Penalty for Contravention in Issuing Prospectus
Non-compliance with the provisions of this section did not specify a fixed penalty amount for companies and individuals knowingly involved in issuing a prospectus in contravention of the law.
Sub-section (9) has been substituted to provide that if a prospectus is issued in contravention of this section, the company and every person knowingly party to the issue shall be liable to a penalty of Rs. 2,00,000.
Introduces a clear, fixed financial penalty for contraventions, creating stronger deterrence against issuance of prospectus in violation of the Act.
Companies and individuals involved in the preparation or approval of prospectus should review compliance with all provisions of Section 26 to avoid penalties. Internal control mechanisms and legal reviews may need to be strengthened.
Section 42 – Offer or Allotment of Shares (Now Securities)
Marginal heading refers to “shares”; sub-section (2) allows offer of “employees stock options”; sub-section (10) prescribes penalty “which may extend to” a certain amount.
Marginal heading now reads “securities”.In sub-section (2), after “employees stock option,” the words “or such other scheme linked to the value of the share capital of a company,” are added. In sub-section (10), “which may extend to” is replaced with “equivalent to” for penalty clarity.
Broadens the scope from shares to all securities.Expands applicability to additional schemes linked to share capital, not just employee stock options. Clarifies penalty calculation, making it fixed/equivalent rather than discretionary.
Companies should review all securities issuance schemes, including ESOPs and other linked schemes, for compliance. Update documentation, agreements, and internal policies to reflect revised language and ensure correct calculation of penalties.
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New Section 43A – Share Capital for Companies in IFSC
No existing provision for companies incorporated in the International Financial Services Centre (IFSC) regarding currency of share capital and related records.
Section 43A is inserted: Companies incorporated in IFSC shall issue and maintain share capital in a permitted foreign currency, with transitional provisions for existing companies to convert from Rupees. Such companies shall maintain books, records, and financial statements in permitted foreign currency; presentation in Rupees is allowed if permitted by IFSC Authority. Central Government may require use of permitted foreign currency for filings under Section 398. Fees, fines, and penalties under the Act must be paid in Rupees.Defines “IFSC”, “IFSC Authority”, and “permitted foreign currency”.
Provides clarity on currency usage for IFSC companies, facilitating international operations and financial reporting. Introduces compliance obligations for maintenance of records in foreign currency and transitional provisions for existing companies.
Companies incorporated in IFSC should: Convert share capital to permitted foreign currency if applicable. Maintain books, financial statements, and records in permitted foreign currency. Comply with filings in foreign currency as required, and pay fees/fines in Rupees. Update internal accounting systems, policies, and reporting practices.
Section 62(1)(b) – Further Issue
Companies may issue shares to employees under
After “under a scheme of employees’ stock option,” the words “or under such other scheme linked
Expands the scope of Section 62 to include other schemes linked to the company’s share capital, not limited to traditional ESOPs. This
Companies should review their existing ESOPs and other incentive schemes to ensure compliance with the amended provision. Drafting and
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of Share Capital
a scheme of employees’ stock options (ESOPs).
to the value of the share capital of the company” are inserted.
allows greater flexibility in designing employee incentive programs.
approvals of new schemes should reflect this broader scope.
Section 68 – Buy-Back of Securities
Sub-sections 2, 5, 6, 8, 11, and Explanation I prescribe conditions for buy-back, limits on percentage of capital, inclusion of sweat equity, verification by affidavit, and penalties for non-compliance.
Sub-section (2): Clause (c) proviso substituted to allow prescribed companies to buy-back up to a prescribed % of paid-up capital and free reserves; limit of 25% (or other prescribed %) applies to total paid-up equity capital per financial year.Clause (g) proviso added permitting prescribed companies to make up to 2 buy-back offers in a year, with minimum 6 months gap between closures.Sub-section (5)(c): After “sweat equity”, added reference to schemes linked to share capital under Section 62(1)(b).Sub-section (6): “and verified by an affidavit” omitted.Sub-section (8): After “sweat equity”, added reference to schemes linked to share capital
Broadens scope of buy-back provisions to include other schemes linked to share capital, allows flexibility for multiple buy- back offers in a year, removes affidavit requirement, and increases penalties for non- compliance. Strengthens accountability for both companies and officers.
Companies should: Review buy-back plans in light of new limits and flexibility for multiple offers. Update documentation for schemes linked to share capital, alongside ESOPs. Revise internal compliance and reporting procedures to reflect removal of affidavit requirement.Update risk assessment and financial provisions for higher penalties. Train officers and relevant teams on revised responsibilities and penalty structure.
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under Section 62(1)(b). (e)Sub-section (11): Company penalties revised to Rs. 25 lakh for listed companies, Rs. 2 lakh for others. Officer penalties revised to Rs. 5 lakh for listed companies, Rs. 2 lakh for others. (f) Explanation I: Added reference to schemes linked to share capital under Section 62(1)(b) alongside employees’ stock options.
Section 77(1) – Debenture Redemption
The second proviso allows companies to satisfy certain conditions for registration of charges within “sixty days” under clause (b).
A new proviso is inserted stating that for prescribed classes of companies, the “sixty days” period shall be read as “one hundred and twenty days.”
Extends the timeline for registration of charges from 60 days to 120 days for specified classes of companies, providing more flexibility in complying with charge registration requirements.
Companies within the prescribed class should update internal compliance processes and timelines for registration of charges to reflect the extended period. Ensure proper documentation and follow-up to avoid penalties for delayed registration.
Section 88 – Register of Members and Debenture Holders
Sub-section (2) prescribes maintenance of the register of members and debenture holders and related details.
A new sub-section (2A) is inserted: “No notice of any trust, whether express, implied or constructive, shall be entered in the register of members or debenture holders maintained under sub-section (1).”
Clarifies that the company’s register of members and debenture holders will not reflect any trust rights, preventing disputes and ensuring that only legal ownership is recorded.
Companies should ensure that their registers do not record any notices of trust, whether express, implied, or constructive. Internal record-keeping and compliance processes should be updated to reflect this clarification.
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Section 96 – Annual General Meeting
Sub-section (2) prescribes that a company must hold an annual general meeting (AGM), but does not explicitly provide for hybrid or electronic participation.
A new sub-section (3) is inserted allowing a company to hold its AGM physically, or through video conferencing or other audio-visual means, either wholly or partly, subject to prescribed terms and conditions. If members requisition a hybrid meeting under Section 100(2), the company must hold it in that mode. Every company must hold a physical AGM at least once every three years.
Introduces flexibility for holding AGMs using digital or hybrid modes while ensuring physical meetings are held periodically. Enhances accessibility and participation for members.
Companies should update AGM procedures, including notice, quorum, and voting mechanisms, to accommodate hybrid or electronic meetings. Ensure systems support video/audio participation and compliance with prescribed conditions. Maintain physical AGMs at least once in three years.
Section 99 – Penalty for Default in AGM Compliance
Marginal heading: “Punishment for default in complying with provisions of sections 96 to 98.” Companies and officers were “punishable with fine which may extend to Rs. 1,00,000 and in case of continuing default, with a further fine which may extend to Rs. 5,000 per day.” The section also covered compliance with Sections
Marginal heading updated to “Penalty for default in complying with provisions of section 96.” References to Sections 97, 98, and Tribunal directions are omitted. Penalty language revised: Companies liable to Rs. 1,00,000 and for continuing default, Rs. 5,000 per day (maximum Rs. 2,00,000). Officers liable to Rs. 50,000 maximum.
Focuses penalty only on AGM- related defaults under Section 96, provides a clear cap on continuing default penalties for both companies and officers, and removes references to other sections and Tribunal directions.
Companies should update compliance monitoring for AGM obligations under Section 96, review internal reporting and escalation mechanisms to ensure defaults are avoided. Officers should be aware of personal liability limits under the revised provision.
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97, 98, and Tribunal directions.
Section 100 – Extraordinary General Meeting
Sub-section (6) allows a company to hold an EGM as requisitioned by members but does not explicitly provide for electronic or hybrid modes.
A new sub-section (7) is inserted allowing a company to hold its EGM physically, or through video conferencing or other audio-visual means, either wholly or partly, subject to prescribed terms and conditions. If members requisition a hybrid meeting under sub-section (2), the company must hold it in that mode.
Introduces flexibility for conducting EGMs using digital or hybrid methods while ensuring member requisitions for hybrid meetings are honored. Enhances accessibility and participation for members.
Companies should update EGM procedures, including notice, quorum, and voting mechanisms, to accommodate hybrid or electronic meetings. Ensure systems support video/audio participation. Communicate processes to members as required.
Section 101(1) – Notice of Extraordinary General Meeting
The provisos in sub-section (1) prescribe the notice period of 21 clear days’ notice and manner for calling EGMs, using “Provided that” and “Provided further.”
The first proviso is amended to specify that EGMs conducted wholly through video conferencing or audio-visual means under Section 100(7) may be called with notice of not less than seven days (or such other period and manner as prescribed), followed by “Provided further.” In the second proviso, “Provided further” is replaced with “Provided also.”
Clarifies that EGMs held entirely through electronic means can have shorter notice periods (minimum 7 days) and standardizes the language of provisos for consistency.
Companies should update EGM notice procedures to allow for electronic/hybrid meetings with shorter notice as permitted, ensuring compliance with prescribed forms and timelines. Internal systems and templates for notices should be revised accordingly.
Section 125 – Investor Education and
Sub-section (2) lists categories of unclaimed amounts to be transferred to
Sub-section (2): (i) In clause (m), “and” at the end omitted.
Expands scope of unclaimed amounts to include bought-back shares; standardizes refund
Companies should: Identify unclaimed amounts related to bought-back shares
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Protection Fund (IEPF)
the IEPF; sub-section (3)(a) prescribes refund of unclaimed dividends; sub- section (4) allows companies to apply to the authority under sub-section (5).
(ii) Clause (ma) inserted: “the amount in respect of shares bought back and extinguished, remaining unpaid or unclaimed for seven or more years.” Sub-section (3)(a) amended to include refunds of amounts referred to in clauses (h) to (n) of sub-section (2). Sub-section (4) revised: Companies may apply in accordance with prescribed procedure and documents, replacing reference to the authority under sub-section (5).Sub-section (12) inserted: The authority may delegate any of its powers/functions to a member, officer, or other person, subject to conditions notified.
provisions; prescribes procedural compliance for applications; provides delegation powers to the authority for operational efficiency.
and include them in IEPF filings. Update refund processes to include amounts under clauses (h)–(n). Follow prescribed procedure for applications to the authority. Monitor authority notifications for delegated powers and ensure compliance.
Section 128(6) – Books of Account, etc.
Non-compliance with sub- sections (1) or (5) or other provisions of Section 128 was “punishable with fine which shall not be less than
Penalty revised: Companies liable to Rs. 5,00,000 if listed; Rs. 50,000 if any other company.Proviso added: If contravention relates to sub-section (1) or (5), the responsible person shall be
Introduces differentiated penalties based on company type and increases personal liability for officers in case of contraventions relating to sub-sections (1) or (5),
Companies should update compliance monitoring for maintenance of books of account and records. Officers responsible for sub-sections (1) and (5) should be made aware of higher personal
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Rs. 50,000 but which may extend to Rs. 5,00,000.”
liable to Rs. 20,00,000 if listed; Rs. 5,00,000 if any other company.
strengthening compliance and accountability.
penalties. Internal audits and reporting procedures may need enhancement.
Section 131 – Voluntary revision of financial statements or Board’s report
If it appears to the directors of a company that— the financial statement of the company; or the report of the Board, do not comply with the provisions of section 129 or section 134 they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in such form and manner as may be prescribed and a copy of the order passed by the
In section 131 of the principal Act, in sub-section (1), in the long line, for the words “three preceding financial years”, the words “three immediately preceding financial years” shall be substituted.
Clarifies that the Tribunal’s power relates to the most recent three financial years, removing ambiguity
Update internal reporting and documentation references; ensure compliance and investigations align with “immediately preceding” period; notify teams preparing records for Tribunal inspection.
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Tribunal shall be filed with the Registrar : Provided that the Tribunal shall give notice to the Central Government and the Income tax authorities and shall take into consideration the representations, if any, made by that Government or the authorities before passing any order under this section: Provided further that such revised financial statement or report shall not be prepared or filed more than once in a financial year: Provided also that the detailed reasons for revision of such financial statement or report shall also
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be disclosed in the Board’s report in the relevant financial year in which such revision is being made.
Sec 132 of Companies Act
Sub-sections 1A, 2, 3A, 3B, 4, 10, 11, and 15 govern NFRA’s establishment, powers, functions, and regulation of professional or other misconduct, but contain limited delegation powers and procedural clarity.
Sub-section (1A) substituted: NFRA is a body corporate with perpetual succession, common seal, property rights, and capacity to sue or be sued.Sub-section (2)(a): after “class of companies,” add “or bodies corporate.” Sub-section (3A) omitted. New sub-sections (3C) and (3D) inserted: Chairperson has general superintendence powers; executive body can delegate powers to Chairperson, full-time members, officers, or committees.Sub-section (4) amendments:Clause (a) amended to include manner specified by NFRA regulations.Clause (c) allows NFRA to issue orders including advisory,
Strengthens NFRA’s corporate and operational structure, clarifies powers of Chairperson and executive body, expands powers to issue orders and enforce compliance, introduces penalties and debarment, and allows engagement of experts. Enhances clarity, accountability, and operational flexibility.
Companies, accounting firms, and professionals should review compliance with NFRA orders and regulations. Update internal reporting and audit procedures to ensure adherence. Officers should be aware of debarment and penalty provisions. Monitor NFRA regulations for procedural and operational changes, and engage experts as necessary for compliance.
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censure, training, or referral to Central Government; Explanation revised to define “professional or other misconduct.” Sub-section (4A) inserted: Penalties and debarment for failure to comply with NFRA orders. Sub-section (10) updated: “prescribed” replaced with “specified by regulations by NFRA.” Sub-section (11) revised: references to Central Government replaced with NFRA; functional and salary references updated.Sub-sections (16)–(17) inserted: Acts/proceedings valid despite vacancies or defects; NFRA may engage experts/professionals to assist functions.
Section 132A – Auditor Registration
Not applicable (new section)
Auditors of certain companies / bodies must intimate registration details to NFRA, file required documents / returns and pay
Establishes mandatory registration and reporting obligations for auditors, with clear
Auditors and audit firms should update internal processes to ensure timely registration, reporting, and
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and Reporting to NFRA
prescribed fees. Failure to comply attracts penalties: Non-furnishing: Rs. 25,000 minimum, Rs. 500/day, max Rs. 25 lakh.Furnishing false/misleading info: Rs. 50,000 minimum, Rs. 1,000/day, max Rs. 50 lakh.
penalties for non-compliance or misrepresentation.
accuracy of submitted information to NFRA.
Section 132B – NFRA Fund
Not applicable (new section)
Central Government may grant funds to NFRA. A Fund (NFRA Fund) will include: grants, fees, other sums, and income from investments. Fund to be applied for NFRA’s expenses and purposes under the Act.
Ensures sustainable financing and operational independence for NFRA.
NFRA to maintain accounting and reporting of fund receipts and expenditures. Monitor grants, fees, and investment income compliance.
Section 132C – Directions by NFRA
Not applicable (new section)
NFRA may issue directions to auditors in public interest or for protection of investors/creditors. Non-compliance attracts penalties: Rs. 50,000 minimum, Rs. 1,000/day; max Rs. 50 lakh (auditor) / Rs. 1 crore (audit firm).
Strengthens NFRA’s enforcement powers over auditors and audit firms.
Auditors should establish internal tracking systems to comply with NFRA directions. Maintain documentation for timely compliance.
Section 132D – Inquiry and Penalties
Not applicable (new section)
NFRA can hold inquiries, summon persons, impose penalties under Sections 132A/132C. Penalties recoverable as arrears of land revenue; credited to Consolidated Fund. Appeal to Appellate Tribunal within 45 days permitted.
Provides formal procedure for inquiries, recovery, and appeal. Enhances NFRA’s authority to enforce compliance.
Auditors and firms must respond to NFRA inquiries. Maintain records and legal support for potential appeals.
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Section 132E – Bar on Civil Courts
Not applicable (new section)
No civil court shall have jurisdiction over matters NFRA is empowered to determine; no injunctions against NFRA actions.
Eliminates parallel judicial interference in NFRA matters.
Auditors and companies should resolve issues through NFRA processes, not courts.
Section 132F – Protection from Suits
Not applicable (new section)
No suit, prosecution, or legal proceeding against Central Government, NFRA, or its officers/employees for actions done in good faith under the Act.
Protects NFRA officials and government personnel from litigation for official actions.
Ensure all actions and orders are documented to establish good faith compliance.
Section 132G – Directions by Central Government
Not applicable (new section)
NFRA bound by written directions on policy questions from Central Government; Authority may give views; Central Government’s decision on policy final.
Aligns NFRA functions with government policy while allowing Authority to express views.
NFRA must implement government policy directions. Document any advice or comments provided to Central Government.
Section 132H – Supersession of NFRA
Not applicable (new section)
Central Government may supersede NFRA up to 6 months under certain circumstances (emergency, non-compliance, public interest). Powers, functions, and properties vest temporarily with Central Government; reconstitution possible. Notification and report to Parliament required.
Provides mechanism for temporary control and reconstitution of NFRA in emergencies or mismanagement.
NFRA to maintain readiness for procedural transition; Central Government to monitor Authority performance.
Section 132I – Fees and Charges
Not applicable (new section)
NFRA may levy fees/charges on auditors; payment manner as specified by NFRA regulations.
Establishes NFRA’s fee-collection powers to fund operations.
Auditors and firms should comply with fee regulations; maintain timely payment records.
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Section 132J – NFRA Regulations
Not applicable (new section)
NFRA may make regulations consistent with the Act covering: investigations, meetings, employee terms, expert engagement, filing documents, penalty recovery, fees. Regulations laid before Parliament for scrutiny.
Provides procedural clarity and statutory backing for NFRA operations.
NFRA to draft, review, and publish regulations; auditors/companies to comply. Maintain awareness of regulatory changes.
Section 132K – Transparency in Regulations
Not applicable (new section)
Draft regulations to be published for public comments; reviewed at least every 3 years. Urgent amendments allowed in public interest or for internal NFRA functioning.
Enhances transparency and accountability in NFRA’s regulatory process.
NFRA to publish drafts, invite feedback, and maintain a regulatory review cycle.
Section 134(3) – Contents of Board’s Report
Board’s report must include details on matters in clause (f) of Sec 143(3) and other prescribed matters.
Clauses (fa) and (pa) inserted: (fa): Board must provide explanations/comments on every auditor observation or remark affecting company functioning or account maintenance, in prescribed form.(pa): Disclose Audit Committee composition and reasons if Board does not accept any recommendation of Audit Committee
Enhances transparency and accountability; stakeholders can see Board responses to auditor observations; strengthens corporate governance by highlighting Board-Audit Committee alignment
Update Board report templates to include: Responses to auditor observations and qualifications. List of Audit Committee members and reasons for non-acceptance of any recommendations.
Section 135 – Corporate Social
Sub-section:
Amendments: Sub-section (1): threshold of net profit increased to Rs. 10 crore
Expands applicability threshold; gives more time to transfer unspent CSR funds; increases
Companies need to:
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Responsibility (CSR)
(1) CSR applicable to companies with net profit ≥ Rs. 5 crore. (6) unspent CSR amount to be transferred within 30 days. (9) penalty of Rs. 50 lakh for non-compliance
or as prescribed. Sub-section (6): “amount remaining unspent” → “unspent amount”, and time for transfer increased to 90 days. Sub-section (9): penalty increased to Rs. 1 crore or as prescribed. Sub-section (10) inserted: Certain prescribed classes of companies may be exempted from CSR compliance.
penalties; allows exemptions for certain companies
Review CSR applicability based on updated thresholds. Adjust CSR spend and unspent fund transfers within 90 days. Update policies to reflect new penalties and potential exemptions.
Section 139 – Appointment of Auditors
Companies are required to appoint statutory auditors under this Chapter; no general exemptions are provided
Sub-section (12) inserted: Certain class or classes of companies fulfilling conditions prescribed by the Central Government shall not be required to appoint auditors
Reduces compliance burden for small, low-risk, or dormant companies; allows flexibility in statutory audit requirements.
Companies must check if they fall under the prescribed classes and conditions; if eligible, they may opt out of statutory auditor appointment and update internal governance policies accordingly.
Section 141(1) – Qualification of Auditors
A firm may be appointed as an auditor, subject to existing eligibility criteria
Proviso inserted: Every partner of the audit firm must be a person registered with a statutory institute or body established under Indian law having powers of such registration. Criteria for eligibility:
Ensures audit firms are composed of fully qualified and registered professionals, improving audit reliability and compliance.
Audit firms must verify all partners meet statutory registration and CPE requirements; Companies must confirm eligibility of audit firms before appointment
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Partner must hold valid membership in a recognized statutory accounting body (e.g., ICAI for chartered accountants).Partner must comply with continuing professional education (CPE) requirements.Partner must not be debarred or under disciplinary action by the statutory institute.
Section 144 – Restrictions on non-audit services by auditors
Proviso allowed restrictions on non-audit services generally for auditors or audit firms
Proviso substituted: Certain classes of companies (as prescribed) shall ensure the auditor or audit firm does not provide, directly or indirectly, any non-audit services to the company, its holding company, or subsidiary. The restriction applies for 3 years after completion of the auditor’s term under Section 139(2).
Strengthens auditor independence and reduces conflict of interest; ensures integrity of audit reports
Companies must ensure their auditors do not provide prohibited non-audit services, including during the 3-year period after term completion; Audit firms must track and comply with the restriction for prescribed classes of companies
Section 147 – Penalty for contraventions
Companies and officers were liable for penalties under Sections 139, 144,and145: Company: Rs. 1 lakh Officer: Rs. 25,000
Amendments: Sub-section (1) proviso: For contraventions of Sections 139(1), 139(5–8,11), 140(4), 141(4), 142(1–2), 146, company
Expands scope of penalties to cover additional sections related to auditor appointment, audit functions, and CSR; introduces daily continuing failure penalties;
Companies must ensure full compliance with updated audit, CSR, and related provisions. Officers should track obligations under Sections 139–146 to avoid personal penalties; maintain internal
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Continuing failure: no detailed daily penalties or expanded coverage
liable to Rs. 1 lakh, with continuing failure Rs. 500 per day up to Rs. 5 lakh. Officers liable to Rs. 25,000, continuing failure Rs. 200 per day up to Rs. 1 lakh. Sub-section (2): Scope extended to Sections 139, 143 (except 12), 144, 145, 146
increases accountability of companies and officers
compliance checklists and reporting mechanisms
Section 148 – Cost Records and Cost Audit
(1) Companies in certain industries required to maintain cost records as per prescribed rules; (3) appointment of cost auditor by Board; (8) and (9) prescribed penalties for default.
Amendments: Sub-section (1A) inserted: Central Government may prescribe standards of cost accounting based on recommendations of the Institute of Cost Accountants of India. Sub-section (3) provisos updated: Firms where majority of partners are qualified in India may be appointed by firm name. Every partner must be registered with a statutory institute.
Strengthens governance of cost audits; ensures cost auditor firms have qualified and registered partners; updates penalty structure for managing directors, CFOs, officers, companies, and cost auditors; aligns terminology with statutory bodies.
Companies must: Maintain cost records as per new standards. Ensure cost auditors meet registration and qualification criteria. Update appointment and remuneration practices. Track defaults carefully to avoid enhanced penalties for officers, companies, and auditors. Align internal compliance policies with Section 147 for other defaults.
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Explanation updated: “Cost Accountants” replaces “Cost and Works Accountants”. Sub-sections (8), (9), (10) substituted: Listed company officer penalty: Rs. 5 lakh; other company: Rs. 50,000. Company default in appointment / payment: Rs. 10,000; continuing default: Rs. 100/day up to Rs. 2 lakh. Officer default: Rs. 10,000; continuing: Rs. 100/day up to Rs. 50,000.Other defaults punishable as per Section 147
Section 149 – Independent Directors
Sets out eligibility, tenure, and restrictions for independent directors; defines disqualifications, including certain transactions and professional relationships.
Amendments: Sub-section (6)(e)(i & ii) updated: References to “preceding financial year” now include “or during the current financial year”.
Clarifies ongoing eligibility and independence of directors; updates thresholds and professional relationships; ensures continuity of independent directors; reduces inadvertent disqualification
Companies must: Ensure independent directors meet criteria for both current and preceding financial year. Track transactions with directors’ firms against updated thresholds.
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“Company secretaries in practice” replaced with “secretarial auditors”. Threshold of 10% replaced with 10% or such lower per cent. as prescribed. Sub-section (6A) inserted: Independent directors must continue to fulfil eligibility criteria throughout their term. Sub-section (11) provisos updated: Restrictions apply to company or its holding, subsidiary, or associate company. Exception: Independent director may continue as employee, partner, or proprietor of legal/consulting firm if transactions with company/holding/subsidiary/ associate are below prescribed threshold. Explanations updated:
Update appointment letters and compliance checks to include tenure calculation rules. Monitor independent director eligibility throughout term as per sub-section (6A).
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Explanation 2 clarifies tenure calculation includes periods served as additional director.
Section 154 – Director Identification Number (DIN)
Section 154 provided for allotment of DIN to directors
Sub-sections (2) – (7) inserted: : DIN holders must submit information for verification at prescribed intervals and in prescribed manner. : DIN may be deactivated or cancelled if: Information not submitted, DIN allotted in contravention of Act/rules, Director disqualified under Section 164 or court/Tribunal order.: Deactivated DIN holders cannot function as directors. : Cancelled DIN results in office of director becoming vacant.: DIN may be surrendered voluntarily.
Strengthens director verification and accountability; links DIN status to director’s ability to hold office; introduces mechanism for deactivation, cancellation, surrender, and reactivation of DIN
Companies and directors must: Ensure DIN information is submitted accurately and on time. Track DIN status to confirm directors can legally hold office. Update internal records to reflect any DIN deactivation, cancellation, or restoration. Comply with prescribed rules and procedures for DIN management and reactivation.
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(7): Deactivated, cancelled, or surrendered DIN may be reactivated/restored upon fulfillment of conditions, payment of fees, and prescribed procedure.
Section 159 – Punishment for contravention of provisions of section 152, section 155 and section 156,
Penalty for making false statements in documents, with fines described as “which may extend to” an amount; continuing default penalties applied without specified maximum
Amendments: “which may extend to” replaced with “of” for clarity. Continuing default penalties now capped at Rs. 5 lakh.
Clarifies language in penalty provision; imposes a maximum limit on continuing default fines, providing certainty and limiting liability
Companies and officers must: Ensure all documents filed are accurate. Track any defaults to avoid cumulative penalties exceeding Rs. 5 lakh. Update internal compliance processes and training to prevent false statements.
Section 161 – Appointment of Additional Directors
(1) Additional directors hold office until the next AGM or the last date on which AGM should have been held, whichever is earlier. (4) Vacancies filled by Board must be subsequently approved at the next AGM.
Amendments: Sub-section (1): Additional directors hold office up to the next general meeting or 3 months from appointment, whichever is earlier.Sub-section (4): Board- appointed directors hold office up to next general meeting or 3 months from the date of his appointment, whichever is earlier, without automatic
Clarifies and limits Board’s powers in appointing directors; ensures member approval is mandatory when prior AGM approval was not obtained; prevents bypassing shareholders’ consent.
Companies must: Ensure additional / alternate / casual vacancy directors comply with 3-month or next general meeting tenure. Obtain prior shareholder approval if the person could not be approved at a general meeting.Update Board resolutions, appointment letters, and internal
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subsequent AGM approval. Sub-section (5) inserted: A person cannot be appointed by the Board as an additional, alternate, or casual vacancy director without prior approval of members if their appointment could not be considered/approved in a general meeting.
policies to reflect new member approval requirement.
Section 164 – Disqualification s for Directors
Directors disqualified if: Involved in related party transactions or contraventions, Failed to comply with other statutory provisions (clauses g–i), Tenure of 3 financial years for certain criteria. (2) Non-compliance resulted in vacancy of office but limited to prior rules.
Amendments: Clause (g): “Dealing with related party transactions” replaced with “or subjected to penalty for default”, word “or” at end omitted.New clause (j): Directors ineligible if they were auditor, secretarial auditor, cost auditor, registered valuer, or insolvency professional of company / holding / subsidiary / associate in the preceding 3 financial years or current year. Explanation clarifies that partners of firms conducting these services are also ineligible.
Expands and clarifies disqualification criteria, including prior professional relationships with the company; introduces fit and proper assessment; reduces look-back period from 3 to 2 years for certain disqualifications; aligns vacancy provisions with Section 167.
Companies must: Screen director candidates against updated disqualification criteria including auditor/professional roles. Apply fit and proper person assessment for all directors as per prescribed rules. Update appointment and resignation procedures to comply with vacancy rules under Section 167. Maintain records for audit/professional services in last 2–3 financial years for compliance verification.
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New clause (k): Director must be assessed as a fit and proper person as per prescribed criteria; different criteria may apply for different classes of companies.Sub-section (2): Tenure reduced from 3 to 2 financial years for certain disqualifications; office of director becomes vacant under Section 167(1) if criteria not met.
Section 165 – Maximum number of directorships
Directors cannot hold directorships in more than 20 companies; Explanation II refers to “of twenty companies”.
Amendments: Proviso inserted: Central Government may, by notification, specify a lower maximum number of directorships for a class of companies or class of directors.Explanation II updated: “of twenty companies” replaced with “under this section” to make the provision flexible.
Provides flexibility for regulating multiple directorships based on company class or director type; ensures compliance with evolving corporate governance requirements.
Companies and directors must: Monitor number of directorships per director in line with any government notifications specifying lower limits.Update internal compliance tracking and appointment approvals accordingly. Ensure filings (e.g., DIR-12) reflect the correct number of directorships under the updated provisions.
Section 166 – Duties of Directors
Sub-section (7) imposed penalty of Rs. 5 lakh for default in complying with provisions of the section.
Amendments: Sub-section (7) clarified: penalty of Rs. 5 lakh remains, and court may order director to pay undue
Expands enforcement by allowing recovery of undue gains; specifies tiered penalties for listed vs. other companies; strengthens accountability for director duties.
Companies and directors must: Ensure directors comply with duties under Section 166,
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gains referred to in sub-section (5). Sub-section (8) inserted: Default in complying with provisions of this section (except sub-section 5): Listed company director: Rs. 5 lakhOther company director: Rs. 2 lakh
especially regarding sub-section (5) on undue gains. Track potential defaults and calculate penalties accurately. Update internal policies and board resolutions to reflect tiered penalties and possible recovery of gains.
Section 167 – Vacation of Office of Director
Director’s office becomes vacant on disqualification under Section 164, resignation, or other grounds; proviso gave limited guidance on timing of vacancy.Penalty for failure to vacate: fine not less than Rs. 1 lakh, may extend to Rs. 5 lakh.
Amendments: Sub-section (1) proviso: If director incurs disqualification under Section 164(2), office becomes vacant in all companies where he is a director after six months from disqualification or upon expiry of tenure, whichever is earlier. Explanation: Date of disqualification is when company fails to comply with Section 164(2)(a) or (b). Sub-section (2) revised: If office is not vacated or DIN is deactivated/cancelled:
Clarifies timing for vacation of office upon disqualification; aligns penalties with tiered system for listed vs. other companies; links DIN status with office of director.
Companies must: Track directors’ disqualification status under Section 164. Ensure directors vacate office within six months or at tenure expiry. Monitor DIN status to prevent directors from functioning unlawfully. Update board and compliance policies to reflect tiered penalties for non-compliance.
Sub-section (5): “Each half of a calendar year and the gap between the two meetings is not less than ninety days”
Sub-section (5) substituted to “A calendar year”
Simplifies requirement for holding board meetings; removes rigid half-year and minimum gap constraints
Update board meeting schedules; revise internal compliance calendar to reflect the new annual requirement; communicate change to directors and secretarial team
Section 184 – Disclosure of interest by director
(1) Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate , firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed.
In section 184 of the principal Act, in sub-section (1), the words “at the first meeting of the Board in every financial year or” shall be omitted.
Simplifies timing requirements for considering related party transactions; provides flexibility for the Board to review transactions without being tied to first meeting of the financial year
Update internal policies for related party transaction approvals; revise Board meeting agendas and compliance checklist to reflect the new flexible timing
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Section 185 – Loans to Directors and Related Parties
No company shall, directly or indirectly, advance any loan, including any loan represented by a book debt to, or give any guarantee or provide any security in connection with any loan taken by,— any director of company, or of a company which is its holding company or any partner or relative of any such director; or any firm in which any such director or relative is a partner.
In section 185 of the principal Act, in sub-section (1), in clause (b), after the words “any firm”, the words “or limited liability partnership” shall be inserted.
Expands scope of restrictions on loans/guarantees to include LLPs; strengthens governance and compliance.
Update internal lending and approval policies; revise compliance checklists to include LLPs; notify directors and concerned officers of expanded restrictions.
Section 186 – Loans, Investments, Guarantees, and Security by Company
Sub Section (13) 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
In section 186 of the principal Act,– (a) in sub-section (13), after the words “the provisions of this section”, the brackets, words and figures “[except sub- sections (9) and (10)]” shall be inserted;
Introduces specific penalty regime for sub-sections (9) and (10); ensures accountability for both company and officers; clarifies penalty scope.
Update internal compliance procedures; monitor transactions covered under sub-sections (9) and (10); implement tracking for continuing defaults; notify officers of revised penalties.
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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.
(b) after sub-section (13), the following sub-section shall be inserted, namely: – “(14) If a company contravenes the provisions of sub-section (9) or sub-section (10), the company shall be liable to a penalty of one lakh rupees and in case of continuing contravention, with a further penalty of five hundred rupees for each day, after the first during which such contravention continues, subject to a maximum of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing default, with a further penalty of two hundred rupees for each day, after the first during which such default continues, subject to a maximum of one lakh rupees.”.
Section 189 – Register of contracts or arrangements in which directors are interested
NA/ No previous provision
In section 189 of the principal Act, after sub-section (5), the following sub-section shall be inserted, namely: “(5A) Every company which fails to comply with the provisions of this
Introduces a specific monetary penalty for non-compliance with charge registration rules; strengthens enforcement.
Update internal compliance checklist for charge filings; implement monitoring and reporting to ensure timely registration; notify officers responsible for charge filings about the penalty.
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section and the rules made thereunder shall be liable to a penalty of two lakh rupees.”.
Section 203A – Resignation of Whole-time Key Managerial Personnel (KMP)
N/A (new provision)
After section 203 of the principal Act, the following section shall be inserted, namely: “203A. (1) A whole-time key managerial personnel of a company, who is not a director, may resign from his office by giving a notice in writing to the company, and the Board shall, on receipt of such notice, take note of the same and shall intimate the Registrar of such resignation in such form and manner and within such time, as may be prescribed: Provided that where the company fails to intimate the Registrar under this sub-section within such time the said key managerial personnel may forward a copy of his resignation along with detailed reasons for his resignation to the Registrar in such manner, as may be prescribed. (2) The resignation of key managerial personnel under sub- section (1) shall take effect from the
Introduces formal resignation process for whole-time KMPs; ensures timely filing with Registrar; clarifies ongoing liability for prior defaults.
Update internal KMP resignation procedures; ensure Board and company secretarial team follow prescribed notice and filing requirements; communicate responsibilities and liabilities to KMPs; update templates for Registrar filings.
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date on which the notice is received by the company or the date, if any, specified by such key managerial personnel in the notice, whichever is later: Provided that such key managerial personnel who has resigned shall be liable even after his resignation for the default for which he was liable during his tenure.”.
Section 204 – Appointment of Secretarial Auditor
Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report made in terms of sub- section (3) of section 134, a secretarial audit report, given by a company secretary in practice , in such form as may be prescribed.
Replace “company secretary in practice” with secretarial auditor. (1A) Eligibility: Only a company secretary in practice can be appointed as secretarial auditor; a firm with majority qualified partners may be appointed under firm name; every partner must be registered with a statutory institute/body in India. –(4) References updated to secretarial auditor.
Introduces formal designation of “secretarial auditor”; clarifies eligibility criteria; allows firm appointment with proper registration; standardizes terminology
Update appointment procedures; verify eligibility of auditors; ensure compliance with registration requirements; revise internal policies and documentation to reflect new terminology
Section 206 – Power to call for information, inspect books
Sec 206 (7) If a company fails to furnish any information or explanation or produce any document required under this section,
If a company fails to furnish information, explanation, or produce documents: company liable to Rs. 1,00,000, continuing failure Rs. 500/day (max Rs. 5,00,000);
Introduces substantial monetary penalties for non-compliance; ensures accountability of both company and officers
Update internal reporting and compliance procedures; notify officers of revised penalties; implement tracking and escalation
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and conduct inquiries
the company and every officer of the company, who is in default shall be punishable with a fine which may extend to one lakh rupees and in the case of a continuing failure, with an additional fine which may extend to five hundred rupees for every day after the first during which the failure continues.
officers in default liable to Rs. 25,000, continuing failure Rs. 200/day (max Rs. 1,00,000)
system to prevent continuing defaults
Section 230 – Power to compromise or make arrangements with creditors and members
(1) Applications under this section or under the Insolvency and Bankruptcy Code, 2016, as applicable. Explanation as per previous law. (6) References to applications under IBC, 2016.
References to IBC 2016 omitted. Provisos added: From commencement of Corporate Laws (Amendment) Act, 2026, all applications under Sections 230–233 to be made to Tribunal having jurisdiction over transferee/resultant company; Tribunal exercises all powers for all companies involved in schemes. Pending applications as of commencement continue to be dealt with under previous provisions. (6) References to IBC 2016 omitted
Simplifies jurisdiction rules; centralizes authority with the Tribunal over transferee/resultant companies; ensures continuity for pending applications
Update internal filing procedures; notify legal and compliance teams about Tribunal jurisdiction changes; ensure all applications under Sections 230–233 follow new jurisdiction rules; monitor pending applications to confirm proper handling.
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Section 233 – Merger or amalgamation of certain companies
(d)Objections and suggestions considered by companies; scheme approved by majority present and voting. (d) Approval threshold “nine-tenths”. Filing copy of scheme with Official Liquidator required. (13) Companies take actions without specifying terms and conditions.
(1) (b) Objections and suggestions considered in general meetings; scheme approved by majority of members/class present and voting holding at least 75% of share value; approval process as prescribed. (d) Approval threshold changed to at least three-fourths. Proviso: Copy of scheme need not be filed with Official Liquidator if it pertains to transfer/division of undertaking. (13) Actions to be taken on such terms and conditions and as specified.
Lowers approval thresholds slightly for schemes; simplifies filing requirements; clarifies that actions are subject to terms and conditions.
Update internal procedures for scheme approval; revise documentation and member notification templates; adjust compliance checklist to reflect new thresholds and filing exemptions.
Section 233A – Disposal of Shares Held by Transferee Company
N/A (new provision)
(1) Transferee company holding its own shares or shares in the name of any trust (on its behalf or for subsidiaries/associates) must deal with or dispose of such shares within 3 years from commencement of Corporate Laws (Amendment) Act, 2026, in prescribed manner.
Introduces mandatory disposal of shares held by transferee companies; ensures reduction of unutilized shares; imposes daily monetary penalties for non- compliance
Identify affected shares; establish disposal or cancellation plan within 3-year period; monitor compliance; notify officers of daily penalty risk for defaults; update internal reporting and share capital records.
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If company fails to comply, such shares shall be cancelled and extinguished, deemed as reduction of share capital.Non-compliance with sub- section (2) attracts penalty of Rs. 10,000 per day until default is remedied.
Section 248 – Power of Registrar to remove name of company from register of companies
(c) a company is not carrying on any business or operation for a period of two immediately preceding financial year and has not made any application within such period for obtaining the status of a dormant company under section 455 he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of
(B) after the words and figures “section 455; or”, the following shall be inserted, namely: ‘Illustration. Where, during examination in the month of June 2025, it was found that a company had not filed the financial statements, or had not filed the annual returns, for the financial years 2022-23 and 2023-24, then a company would be covered under this clause. Explanation. –– For the purposes of this clause, the expression “significant accounting transaction” shall have the meaning assigned to it in clause (ii) of the Explanation to sub-section (1) of section 455; (c) in sub-section (2),––
Broadens criteria for identifying inactive companies; clarifies procedural steps; allows third- party reporting; aligns terminology with strike-off process.
Update internal monitoring for inactive companies; include current financial year and two-year inactivity checks; update notice publication procedures; allow third-party submissions; revise templates for strike-off orders and timelines.
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thirty days from the date of the notice. (2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital , file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued inthe prescribed manner. (5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is
after the words “extinguishing all its liabilities”, the words “in such manner as may be prescribed,” shall be inserted;the words, brackets and figure “on all or any of the grounds specified in sub-section (1)” shall be omitted; in sub-section (5),— after the words “mentioned in the notice”, the words, brackets and figure “published under sub- section (4)” shall be inserted; after the words “is shown by the company”, the words “or by any other person” shall be inserted. in sub-section (6),— for the words “before passing an order”, the words “before striking off the name of the company” shall be substituted; in the proviso, for the words “date of the order removing the name”, the words “date of
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shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved. (6) The Registrar, before passing an order under sub-section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director , director or other persons in charge of the management of the company:
striking off the name” shall be substituted.
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Section 249 – Restrictions on making application under section 248 in certain situations
Sub section (2) If a company files an application under sub-section (2) of section 248 in violation of sub- section (1), it shall be punishable with fine which may extend to one lakh rupees.
Sub-section (2): “Liable to a penalty of fifty thousand rupees”
Reduces maximum financial penalty for non-compliance; provides clearer, fixed penalty
Update compliance manuals and internal guidelines; notify officers and staff about revised penalty amount; adjust accounting for potential penalties
Section 252 – Appeal to Tribunal
(1) Any person aggrieved by an order of the Registrar , notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies:
In section 252 of the principal Act,— in the marginal heading, for the word “Tribunal”, the words “Regional Director or Tribunal” shall be substituted; in sub-section (1),––for the word “Tribunal” wherever it occurs, the words “Regional Director” shall be substituted; for the words “it may order”, the words “the Regional Director may order” shall be substituted; (c) in sub-section (2), for the word “Tribunal”, the words, brackets and figures “Regional Director under sub-section (1) or the Tribunal under sub-section (3), as the case may be,” shall be substituted.
Shifts primary authority from Tribunal to Regional Director for certain powers; clarifies hierarchy and responsibility; reduces dependency on Tribunal.
Update internal procedures to reflect Regional Director as primary authority; notify legal and compliance teams; revise documentation and references to reflect new terminology.
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(2) A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within thirty days from the date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation.
Section 271 – Powers and Notifications
(a) “The Central Government may take such action by the Tribunal as provided under this Act.” (c) “The Central Government may make rules or provisions by notification under this Act for the purposes of this Part.”
(d) “The Central Government may take such action as provided under this Act.” (c) “The Central Government may make rules or provisions for the purposes of this Part.”
Removes procedural references to the Tribunal and notifications; simplifies language and reduces ambiguity in enforcement
Update internal guidance and legal references to reflect simplified language; ensure staff and stakeholders are aware of revised wording
Section 361 – Summary procedure for liquidation
Orders under this Chapter; clause (i) “and”Original provisions on appointment of Official
Orders “in accordance with this Chapter under circumstances in clauses (a), (b), (d) of section 271”; clause (i) changed to “or”
Clarifies scope of orders and circumstances; allows appointment of insolvency professionals as liquidators; defines authority and powers
Update internal procedures for liquidator appointments; notify relevant officers; ensure compliance with revised authority and powers; document explanation for Official
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Liquidator Authority and powers vaguely definedWording “under the provision”
(2) Central Government may appoint Official Liquidator or insolvency professional under IBC 2016 as liquidator Affairs of company handled by Official Liquidator or officer not below Assistant Director; powers as “it may direct” Wording updated to “continued under the provision” Explanation: Official Liquidator includes IBC-registered insolvency professional appointed under sub- section (2)
clearly; aligns terminology with IBC.
Liquidator including insolvency professionals.
Section 365A – Right to Appeal
N/A (new provision)
Any person aggrieved by an order of the Central Government under this Part may appeal within 45 days before the Appellate Tribunal, in the prescribed manner and on payment of prescribed fee
Introduces formal appeal mechanism; provides legal recourse against government orders under this Part
Inform stakeholders about appeal rights; establish internal process for filing appeals within 45-day timeline; ensure compliance with prescribed procedures and fees
Section 374. Obligations of companies registering under this Part
Every company which is seeking registration under this Part shall,— (a) ensure that secured creditors of the company, prior to its registration under this Part, have either consented to or
In section 374 of the principal Act, in clause (c),–– (a) for the words “an affidavit, duly notarised”, the words “a declaration, in such form as may be prescribed” shall be substituted;
Simplifies documentation; expands applicability to non- trading companies
have given their no objection to company’s registration under this Part; publish in a newspaper, advertisement one in English and one in vernacular language in such form as may be prescribed giving notice about registration under this Part, seeking objections and address them suitably; file an affidavit, duly notarised, from all the members or partners to provide that in the event of registration under this Part, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered, for its dissolution as partnership firm, limited liability partnership,
(b) after the words “co-operative society, society”, the words “, any non-trading company” shall be inserted.
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cooperative society, society or any other business entity, as the case may be. (d) comply with such other conditions as may be prescribed.
Section 378ZA – Annual general meetings
(1)Every Producer Company shall in each year, hold, in addition to any other meetings, a general meeting, as its annual general meeting and shall specify the meeting as such in the notices calling it, and not more than fifteen months shall elapse between the date of one annual general meeting of a Producer Company and that of the next: Provided that the Registrar may, for any special reason, permit extension of the time for holding any annual general meeting (not being the first annual general meeting) by a
In section 378ZA of the principal Act,–– (a) in sub-section (1), in the proviso, for the words “Provided that”, the following shall be substituted, namely:–– “Provided that in case of the first annual general meeting, it shall be held within a period of nine months from the date of closing of the first financial year of the company and in any other case, within a period of six months, from the date of closing of the financial year: Provided further that if a company holds such first annual general meeting, it shall not be necessary for the company to hold any annual general meeting
Clarifies AGM timelines, reduces mandatory meetings in first year, strengthens first AGM procedures, allows smaller quorum in sub- section 9.
Update company calendar for AGM; communicate new AGM timelines to members; adjust first AGM agenda to include article adoption and director appointments; revise quorum requirements
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period not exceeding three months. A Producer Company shall hold its first annual general meeting within a period of ninety days from the date of its incorporation.The Members shall adopt the articles of the Producer Company and appoint directors of its Board in the annual general meeting.
in the year of its incorporation: Provided also that”; (b) sub-section (2) shall be omitted; (c) for sub-section (3), the following sub-section shall be substituted, namely:–– “(3) The Members shall adopt the articles of the Producer Company referred to in clause (b) of sub- section (1) of section 378G and appoint directors of its Board in the first annual general meeting.”; (b) in sub-section (9), for the words “members of the Producer Company shall”, the words “members or one hundred members of the Producer Company, whichever is less, shall” shall be substituted.
Section 378ZF – Internal Audit.
Every Producer Company shall have internal audit of its accounts carried out, at such interval and in such manner as may be specified in articles, by a chartered accountant as defined in
(1) Every Producer Company having an average annual turnover exceeding five crore rupees or such other amount, as may be prescribed, in each of the three consecutive financial years, shall be required to
Introduces mandatory internal audit for larger Producer Companies; improves financial oversight and governance.
clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949.
appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board, to conduct internal audit of the functions and activities of the Producer Company. (2) The manner and the intervals in which the internal audit shall be conducted and reported to the Board, shall be such as may be prescribed.”.
Section 378ZM – Penalty for contravention.
If any person, other than a Producer Company registered under this Chapter, carries on business under any name which contains the words “Producer Company Limited”, he shall be punishable with fine which may extend to ten thousand rupees for every day during which such name has been used by him. If a director or an officer of a Producer Company, who wilfully fails to
Penalty Rs. 1,00,000; continuing failure Rs. 500 per day, max Rs. 5,00,000. Penalty Rs. 25,000; continuing failure Rs. 200 per day, max Rs. 5,00,000.Directors/officers failing to hand over books or convene meetings: penalty Rs. 25,000; continuing failure Rs. 200 per day, max Rs. 1,00,000.
Higher monetary penalties; removal of imprisonment; ensures timely handover of records and meetings; encourages compliance
Update compliance policies; notify officers and directors; implement reminders for meetings and record handovers; revise risk assessments
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furnish any information relating to the affairs of the Producer Company required by a Member or a person duly authorised in this behalf, he shall be liable to imprisonment for a term which may extend to six months and with fine equivalent to five per cent. of the turnover of that Company during the preceding financial year. If a director or officer of a Producer Company fails to hand over the custody of books of account and other documents or property in his custody to the Producer Company of which he is a director or officer; or fails to convene annual general meeting or other general meetings, he shall be punishable with fine which may extend to one lakh rupees, and in
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the case of a continuing default or failure, with an additional fine which may extend to ten thousand rupees for every day during which such default or failure continues.
Section 378ZS – Re- conversion of Producer Company to inter-State co- operative society
Sub section (6) If default is made in complying with sub- section (4), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to one hundred rupees, for each copy in respect of which default is made.
“If default is made in complying with sub-section (4), the company and every officer of the company, who is in default, shall be liable to a penalty of one hundred rupees, for each copy in respect of which default is made.”
Introduces a fixed penalty of Rs. 100 per copy; strengthens officer accountability; simplifies enforcement.
Companies must verify compliance with sub-section (4); maintain proper records; officers should ensure adherence to avoid penalties.
Section 392 – Punishment for contravention
Without prejudice to the provisions of section 391, if a foreign company contravenes the provisions of this Chapter, the foreign company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and in the case of a continuing offence, with an additional fine which may extend to fifty thousand rupees for every day after
Amendment: Company shall be liable to a penalty of Rs. 1 lakh and in case of continuing contravention, Rs. 500 per day after the first day, subject to maximum Rs. 5 lakh. Every officer in default: Rs. 25,000 and Rs. 200 per day for continuing contravention, subject to maximum Rs. 2 lakh.
Introduces differentiated penalties for company and officers; imposes daily penalties to ensure timely compliance; clarifies maximum liability.
Companies and officers must: Monitor compliance to avoid daily accumulating penalties. Maintain records of compliance actions. Ensure timely reporting and filings to prevent officer-level penalties.
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the first during which the contravention continues and every officer of the foreign company who is in default shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees.
Section 396 – Registration offices
Marginal heading: “Offices” Central Government could appoint Regional Directors and Assistant Registrars Powers of officers limited to specified designations
Amendments: Marginal heading changed to “and other offices”. Sub-section (1A) inserted: Central Government may appoint Regional Directors, Additional/Joint/Deputy Regional Directors with prescribed powers. Sub-section (2) updated: “Assistant Registrars or such other officers”. Sub-section (2A) inserted: Central Government may authorize officers not below Assistant Director/Assistant Registrar to exercise powers of Regional Director/Registrar.
Expands flexibility and hierarchy of officers under Company Law; allows decentralization and delegation; ensures effective discharge of functions under the Act.
Companies and professionals should: Identify the designated officers empowered to act in their matters. Track notifications for appointments and delegation of powers. Ensure correspondence and compliance align with authorized officer hierarchy.
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Section 396A – Appeal against Registrar’s decision
No provision for appeal specifically against decisions of Registrar under sections 4 or 7
New section inserted: Any person aggrieved by Registrar’s decision under section 4 (incorporation) or section 7 (conversion/alteration) may appeal to an officer not below the rank of Joint Director. Appeal must follow form, manner, and period as prescribed.
Introduces a formal appellate mechanism for incorporation and conversion-related decisions; improves transparency and accountability in Registrar’s decisions
Companies and stakeholders must: Track Registrar decisions under sections 4 & 7. Prepare to file appeal within prescribed period and format if aggrieved.Maintain records and documentation supporting appeal.
Section 403 – Fee for filing, etc
First proviso: “shall not be less than Rs. 100 per day”. Second proviso: no specified upper limit for additional fees.
In section 403 of the principal Act, in sub-section (1), –– in the first proviso, for the words “shall not be less than one hundred rupees per day”, the words “shall not be less than such amount per day as may be prescribed” shall be substituted. in the second proviso, for the words “Provided further”, the following shall be substituted, namely: –– “Provided further that the amount of additional fees shall not exceed two lakh rupees for such class or classes of
Introduces flexibility in daily fees while providing maximum cap for certain companies; reduces uncertainty and aligns with government-prescribed rules.
Companies must: Check prescribed daily fee rates once notified. Identify eligibility for Rs. 2 lakh maximum fee. Ensure timely compliance with filings to avoid additional fees.
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companies, as may be prescribed: Provided also”.
Section 410 – Constitution of Appellate Tribunal
The Central Government shall, by notification , constitute, with effect from such date as may be specified therein, an Appellate Tribunal to be known as the National Company Law Appellate Tribunal consisting of a chairperson and such number of Judicial and Technical Members, as the Central Government may deem fit, to be appointed by it by notification, for hearing appeals against,— the orders of the Tribunal or of the National Financial Reporting Authority under this Act; andany direction, decision or order referred to in section 53A of the Competition Act, 2002 in accordance with the provisions of that Act.
In section 410 of the principal Act, in clause (a), after the words “National Financial Reporting Authority”, the words “or of the Valuation Authority” shall be inserted.
Broadens jurisdiction of Appellate Tribunal; provides appellate mechanism for valuation-related decisions; strengthens regulatory oversight in valuation matters
Companies and professionals must: Be aware that orders of Valuation Authority are now appealable before Appellate Tribunal Align litigation strategy for valuation disputes accordingly Track compliance with valuation regulations and appellate procedures
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Section 418A – Benches of Appellate Tribunal
The powers of the Appellate Tribunal may be exercised by the Benches thereof to be constituted by the Chairperson: Provided that a Bench of the Appellate Tribunal shall have at least one Judicial Member and one Technical Member. The Benches of the Appellate Tribunal shall ordinarily sit at New Delhi or such other places as the Central Government may, in consultation with the Chairperson, notify: Provided that the Central Government may, by notification, after consultation with the Chairperson, establish such number of Benches of the Appellate Tribunal, as it may consider necessary, to hear appeals against any direction, decision or
In section 418A of the principal Act, after sub-section (2), the following sub-section shall be inserted, namely:— “(3) If the Members of a Bench of the Appellate Tribunal differ in opinion on any point or points, it shall be decided according to the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the Chairperson for hearing on such point or points by one or more of the other Members of the Appellate Tribunal and such point or points shall be decided according to the opinion of the majority of Members who have heard the case, including those who first heard it.”.
Ensures clarity and continuity in decision-making; avoids deadlock in tribunal proceedings; strengthens judicial process
Companies and professionals must: Be aware that appeal outcomes may involve additional hearings in case of split decisions Plan litigation timelines accordingly
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order referred to in section 53A of the Competition Act, 2002 and under section 61 of the Insolvency and Bankruptcy Code, 2016.
Section 419 – Benches of Tribunal
Section 419(4) – The Central Government shall, by notification, establish such number of benches of the Tribunal, as it may consider necessary, to exercise the jurisdiction, powers and authority of the Adjudicating Authority conferred on such Tribunal by or under Part II of the Insolvency and Bankruptcy Code, 2016.
Amendments: Sub-section (4): Scope expanded from “Part II” to “any provisions of the Act”.Sub-section (4A) inserted: President may constitute Special Benches for cases under Companies Act or Insolvency and Bankruptcy Code, 2016
Enhances flexibility and efficiency of Tribunal; enables specialized benches for complex or important matters; improves case disposal speed
Companies must: Track cases assigned to Special Benches Prepare for specialized adjudication (especially in IBC matters) Align legal strategy with broader jurisdiction of Tribunal benches
Section 441 – Compounding of Offences
Offences punishable with fine not exceeding Rs. 25 lakh could be compounded
Amendment: Threshold increased from Rs. 25 lakh to Rs. 1 crore for compounding of offences
Expands scope of compounding mechanism; reduces litigation by allowing more cases to be settled without court proceedings; promotes ease of doing business
Companies and officers must: Evaluate eligibility for compounding for offences up to Rs. 1 crore Consider compounding as a faster alternative to litigation Update compliance and legal strategy to utilize expanded compounding limits.
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Section 446B – Lesser penalties for certain companies
Notwithstanding anything contained in this Act, if penalty is payable for non- compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one- half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.
Amendment: Penalty shall be one-half, or such lower percentage (not exceeding one-half) as may be prescribed, of the prescribed penalty
Introduces flexibility for prescribing reduced penalties; allows government to further relax penalties for certain classes of companies
Eligible companies must: Check applicable prescribed percentage (may be lower than 50%) Update compliance calculations based on revised penalty structure Ensure classification (small company, OPC, etc.) is properly documented to avail benefit
Section 447 – Punishment for Fraud
Without prejudice to any liability including repayment of any debt under this Act or any other law for the time being in force, any person who is found to be guilty of fraud involving an amount of at least ten lakh rupees or
Amendments: Minimum amount increased from Rs. 10 lakh to Rs. 25 lakh.Threshold in second proviso increased from Rs. 50 lakh to Rs. 1 crore.
Significantly increases monetary thresholds for fraud, indicating stricter stance on corporate fraud; aligns penalties with higher-value transactions
Companies and officers must: Strengthen internal controls and fraud detection mechanisms Reassess risk exposure in financial transactions
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one percent. of the turnover of the company, whichever is lower , shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud: Provided that where the fraud in question involves public interest, the term of imprisonment shall not be less than three years. Provided further that where the fraud involves an amount less than ten lakh rupees or one per cent. of the turnover of the company, whichever is lower, and does not involve public interest, any person guilty of such fraud shall be punishable with imprisonment for a term which may extend to five
Ensure strict compliance and reporting to avoid higher penalties under revised thresholds.
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years or with fine which may extend to fifty lakh rupees or with both.
Section 453 – Punishment for improper use of “Limited” or “Private Limited”
If any person or persons trade or carry on business under any name or title, of which the word “Limited” or the words “Private Limited” or any contraction or imitation thereof is or are the last word or words, that person or each of those persons shall, unless duly incorporated with limited liability, or unless duly incorporated as a private company with limited liability, as the case may be, punishable with fine which shall not be less than five hundred rupees but may extend to two thousand rupees for every day for which that name or title has been used.
Amendment: Fixed penalty of Rs. 1 lakh for default. Continuing failure: Rs. 500 per day after the first day (subject to limits as may be prescribed).
Shifts from minor daily fine to substantial base penalty; increases compliance pressure; standardizes penalty structure across the Act
Companies and officers must: Ensure timely compliance to avoid high base penalty of Rs. 1 lakh Track ongoing defaults to prevent accumulation of daily penalties Update internal compliance systems to flag non-compliances immediately
Section 454 – Adjudication of Penalties
(1) Adjudicating officer was Registrar. (5) Appeal lay only to Regional Director.
Amendments: Sub-section (1): “Registrar” replaced with “Assistant Registrar”.
Strengthens adjudication framework; introduces flexibility with new appellate authority; enables direct enforcement of penalties by courts; facilitates shift from criminal prosecution to
Companies and officers must: Use application route (1A) for adjudication proactivelyTrack appellate options (Regional Director or new Appellate
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(8) Penalties included fines/imprisonment but no explicit power to enforce recovery via Court direction. No provision for application by company or credit to Consolidated Fund.
(1A) inserted: Company/officer may apply for adjudication of penalty in prescribed manner. Sub-section (5): Appeal can be made to Regional Director or notified Appellate Authority (not below rank of Joint Director). Sub-section (7): Extended to include Appellate Authority. Sub-section (8): Courts empowered to direct payment of penalty amount along with punishment. (9) inserted: Penalties credited to Consolidated Fund of India. (10) inserted: Mechanism for transfer/withdrawal of court cases to adjudication framework as per notified scheme.
adjudication regime; improves ease of doing business
Authority) Prepare for mandatory payment enforcement through courts Monitor transition of pending cases to adjudication under new scheme Update compliance strategy for penalty-based regime instead of prosecution.
Section 454B – Recovery of Penalty Amounts
No detailed mechanism under Companies Act for recovery of unpaid penalties; reliance on general enforcement
New Section inserted: Recovery Officer empowered to recover unpaid penalties via: Attachment & sale of movable property
Establishes a strong enforcement and recovery framework; prevents evasion through asset transfers; aligns with Income-tax recovery powers
Companies and individuals must: Ensure timely payment of penalties to avoid coercive recovery action.
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Attachment of bank accounts Attachment & sale of immovable property Arrest & detention Appointment of receiver Applies provisions of Income-tax Act recovery framework (Secs 220–232, Schedules, Rules).Includes transferred assets (to spouse / minor family) for recovery.Recovery Officer can seek district administration support
Avoid transferring assets to evade liability. Maintain proper records of assets and transactions
Section 454C – Settlement of Penalties
No formal mechanism for settlement of penalty proceedings under the Act
New Section inserted: Allows settlement of contraventions before penalty order Central Government to constitute Specified AuthorityApplication can be filed before penalty order
Introduces alternative dispute resolution mechanism; reduces litigation; encourages voluntary compliance
Companies and officers must: Evaluate option to settle proceedings early File application before penalty order is passed Prepare justification based on nature and impact of default
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Settlement based on nature, gravity, and impact No appeal against settlement orderAmount credited to Consolidated Fund of India
Section 454 – Pre-deposit for Appeals
No specific requirement for mandatory pre-deposit before filing appeal against orders of NFRA, Valuation Authority, or Adjudicating Officer
New Section 454D inserted: No appeal shall be entertained unless the appellant deposits 10% of the penalty/amount imposed. Applies to orders of:National Financial Reporting Authority (Section 132),Valuation Authority (Section 247), Adjudicating Officer (Section 454). Deposit to be made in the manner directed by the relevant appellate authority.
Introduces financial discipline in appeals; discourages frivolous appeals; ensures partial recovery of penalties upfront; aligns with similar pre-deposit provisions in other laws
Companies and professionals must: Arrange for 10% pre-deposit before filing appeal. Factor in financial impact before challenging orders. Update litigation and compliance strategy to include pre-deposit requirement.Maintain proper documentation for deposits made to appellate authorities
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Section 455 – Dormant Company
“inactive company” means a company which has not been carrying on any business or operation, or has not made any significant accounting transaction during the last two financial years , or has not filed financial statement and annual returns during the last two financial years; “significant accounting transaction” means any transaction other than— payment of fees by a company to the Registrar;payments made by it to fulfil the requirements of this Act or any other law; allotment of shares to fulfil the requirements of this Act; and
in sub-section (1), for the words “or an inactive company may”, the words “or an inactive company shall” shall be substituted; in the Explanation below sub- section (1),–– in clause (i)–– for the words “financial statements and”, the words “financial statements or” shall be substituted; for the word “last” occurring at both the places, the word “preceding” shall be substituted;in clause (ii),–– in sub-clause (c), the word “and” shall be omitted; in sub-clause (d), for the word “record.”, the words “record; and” shall be substituted;
Makes compliance for inactive companies mandatory, strengthens reporting requirements, and adds clarity on irrelevant receipts/payments as default triggers.
Inactive companies must: Apply for inactive status as mandated. Ensure financial records, statements, and operational receipts/payments are accurately maintained.Update internal systems to flag any non-business-related receipts/payments.Align filings and record-keeping with the updated Explanation clauses.
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(d) payments for maintenance of its office and records.
(C) after sub-clause (d), the following sub-clause shall be inserted, namely:–– “(e) receipt or payment not relatable to the business or operations of the company.”.
Section 466A – Directions, Guidelines, or Circulars by Central Government
No such provision existed; post-466, the Act did not explicitly empower the Central Government to issue procedural guidance.
New Section 466A inserted: Central Government may issue directions, guidelines, or circulars to: clarify meaning or intent of any rule;lay down procedural requirements ancillary to any rule. Consultation: Normally, consultation with expert bodies or individuals is required.Urgent issuance: In public interest, directions can be issued without consultation, with reasons recorded in writing. Explanation: Directions/guidelines/circulars are in addition to rules under
Provides statutory framework for procedural guidance and clarifications by the Central Government; enables quick response in public interest while ensuring rules retain primacy; ensures transparency through required consultation or reasoned justification.
Companies and officers must: Monitor directions, guidelines, or circulars issued under this section for compliance. Align internal procedures with any clarifications or ancillary requirements. Maintain records of compliance with guidance issued under Section 466A, especially when issued urgently without consultation.
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Section 469, but in case of conflict, the rule prevails.
Section 469 – Power of Central Government to make rules
Any rule made under sub- section (1) may provide that a contravention thereof shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which such contravention continues.
Amendment: Maximum penalty for company, officer, or other person: Rs. 5 lakh.Continuing default: up to Rs. 5,000 per day, as prescribed, until default is remedied.
Introduces clear monetary caps for both initial and continuing defaults, providing predictability and limiting liability for companies and officers.
Companies and officers must: Track compliance with rules under the Act. Rectify any default promptly to avoid daily accumulating penalties. Maintain internal monitoring systems to ensure adherence to prescribed rules and avoid fines.
Moving Forward
As the next step, the JPC is expected to invite representations from stakeholders, undertake a detailed review of the Bill’s provisions, and submit its report and recommendations to Parliament. Following the submission of the JPC report, the Bill will be taken up again for consideration and passage, with any revisions incorporated based on the Committee’s findings. Thereafter, the amended provisions may be notified and brought into force, either immediately or in a phased manner, as may be prescribed.
