Key Highlights Corporate Laws (Amendment) Bill, 2026 - Part II

Companies Act 2013

Companies (Amendment) Bill 2026

Impact of Companies (Amendment) Bill 2026

Chapter IV- Share Capital and Debentures

Section 43A - Kinds of Share Capital

Bill seeks to insert new section 43A in the Companies Act to provide for the requirements in respect of issue and maintenance of share capital, preparation and maintenance of books of account, etc., filing, submitting or delivering documents by companies set up and incorporated in the IFSC jurisdiction in a permitted foreign currency. It also seeks to clarify that such companies shall pay fees, fines and penalties under the Companies Act and the rules made thereunder in Indian rupees.

As per Proposal, IFSC companies to be allowed to issue and maintain share capital in permitted foreign currency, prepare and maintain books of accounts and financial statements in foreign currency.

Section 68- Power of Company to Purchase its Own Securities

Section 68:- (2) No company shall purchase its own shares or other specified securities under sub-section (1), unless— (c) the buy-back is twenty-five per cent or less of the aggregate of paid-up capital and free reserves of the company:

Provided that in respect of the buy-back of equity shares in any financial year, the reference to twenty-five per cent in this clause shall be construed with respect to its total paid-up equity capital in that financial year;

(g) the buy-back in respect of shares or other specified securities other than those specified in clause (f) is in accordance with such rules as may be prescribed:

Provided that no offer of buy-back under this sub-section shall be made within a period of one year reckoned from the date of the closure of the preceding offer of buy-back, if any.

(5) The buy-back under sub-section (1) may be—(c) by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or sweat equity.

(6) Where a company proposes to buy-back its own shares or other specified securities under this section in pursuance of a special resolution under clause (b) of sub-section (2) or a resolution under item (ii ) of the proviso thereto, it shall, before making such buy-back, file with the Registrar and the Securities and Exchange Board, a declaration of solvency signed by at least two directors of the company, one of whom shall be the managing director, if any, in such form as may be prescribed and verified by an affidavit to the effect that the Board of Directors of the company has made a full inquiry into the affairs of the company as a result of which they have formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board:

Provided that no declaration of solvency shall be filed with the Securities and Exchange Board by a company whose shares are not listed on any recognised stock exchange.

(11) If a company makes any default in complying with the provisions of this section or any regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than one lakh rupees but which may extend to three lakh rupees.

Explanation I.—For the purposes of this section and section 70, "specified securities" includes employees' stock option or other securities as may be notified by the Central Government from time to time.

Explanation II.—For the purposes of this section, "free reserves" includes securities premium account.

Clause 29 of the Bill seeks to replace existing proviso with two new provisos in clause (c) of sub-section (2) of section 68 of the Companies Act to provide that prescribed class or classes of companies may buy-back shares up to such per cent. of the aggregate of paid-up capital and free reserves as may be provided by rules.

It also seeks to insert a proviso to clause (g) of sub-section (2) thereto to allow prescribed class or classes of companies to make up to two offers of buy-backs within a period of year in such a manner that the second buy-back during the year is not made earlier than six months from the date of closure of the preceding offer for buy-back during the year.

Further, it seeks to amend clause (c) of sub-section (5) of section 68 of the Companies Act, 2013 to include the words “or a scheme linked to the value of the share capital of a company referred to in clause (b) of sub-section (1) of section 62” after the words “sweat equity”. Buy-back through tender offers is an efficient way of returning surplus funds to shareholders and it is proposed to allow prescribed class of companies to avail such mechanism. Further it is proposed that companies which are debt free can be considered to undertake more than one buy-back in a financial year.

It also seeks to omit words “and verified by an affidavit” in sub-section (6) so that declaration of solvency to be  filed for the purposes need not be in the form of an affidavit.

The punishment of fine provided under sub-section (11) is proposed to be converted into penalties as the offence is being decriminalised.

As per Proposal, in Section 68(2)(c), existing proviso to be replaced with two new provisos which allow prescribed class of companies to buy back shares up to such per cent. of the aggregate of paid-up capital and free reserves as may be provided by rules.

New proviso to be added in Section 68(2)(g) prescribe that Companies can undertake two buy- backs in a year, subject to gap of minimum 6 months and second buy-back to be allowed only after closure of first offer.

Proposed amendments to Section 68(5)(c) and Section 68(6) of the Companies Act, 2013 provide that:
(i) Buy-back restrictions to be extended to instruments such as RSUs (Restricted Stock Units), SARs (Stock Appreciation Rights), and other share-linked compensation schemes; and
(ii) the requirement for declaration of solvency to be simplified, with the affidavit requirement being dispensed with..

The punishment of fine provided under Section 68(11) is proposed to be converted into penalties instead of criminal offence.

Chapter X- Audit and Auditors

Section 141- Eligibility, Qualifications and Disqualifications of Auditors

Section 141:- (1) A person shall be eligible for appointment as an auditor of a company only if he is a chartered accountant:

Provided that a firm whereof majority of partners practising in India are qualified for appointment as aforesaid may be appointed by its firm name to be auditor of a company.

Bill seeks to insert a new proviso in sub-section (1) of Section 141 of the Companies Act to provide that every partner of the firm shall be a person who has been registered with a statutory institute or body established under a law in India having powers of such registration.

As per Proposal, every partner of the firm must be Registered with a statutory institute or body in India to be appointed as Statutory auditor of the Company.

Section 139- Appointment of Auditors

Bill seeks to insert a new sub-section (12) in section 139 of the Companies Act to provide that prescribed class or classes of companies which fulfil such conditions, as may be provided by rules, shall not be required to appoint auditors under Chapter X of the said Act. This amendment is aimed at facilitating ease of compliance for small companies.

As per Proposal, certain prescribed classes of companies (likely small companies) are to be exempted from mandatory auditor appointment.

Section 144:- Auditor not to Render Certain Services

Section 144:-  An auditor appointed under this Act shall provide to the company only such other services as are approved by the Board of Directors or the audit committee, as the case may be, but which shall not include any of the following services (whether such services are rendered directly or indirectly to the company or its holding company or subsidiary company, namely:—

(a) accounting and book keeping services;

(b) internal audit;

(c) design and implementation of any financial information system;

(d) actuarial services;

(e) investment advisory services;

(f) investment banking services;

(g) rendering of outsourced financial services;

(h) management services; and

(i) any other kind of services as may be prescribed:

Provided that an auditor or audit firm who or which has been performing any non-audit services on or before the commencement of this Act shall comply with the provisions of this section before the closure of the first financial year after the date of such commencement.

Bill seeks to insert new proviso to section 144 of the Companies Act to provide that an auditor or audit firm of prescribed class or classes of companies shall not provide, directly or indirectly, any non-audit services to the company or its holding company or subsidiary. It also seeks to provide that the restriction under this section shall also apply for a period of three years after the auditor or audit firm has completed his or its term under sub-section (2) of section 139.

As per Proposal, for prescribed classes of companies, the auditor or audit firm is to be prohibited from providing any non-audit services directly or indirectly to the company, its holding company and its subsidiary companies. And this restriction will continue for 3 years after completion of auditor’s term.

Section 147- Punishment for Contravention

Section 147:- (1) If any of the provisions of sections 139 to 146 (both inclusive) is contravened, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees.

(2) If an auditor of a company contravenes any of the provisions of section 139, section 144 or section 145, the auditor shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees or four times the remuneration of the auditor, whichever is less.

Provided that if an auditor has contravened such provisions knowingly or wilfuly with the intention to deceive the company or its shareholders or creditors or tax authorities, he shall be punishable with imprisonment for a term which may extend to one year and with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees or eight times the remuneration of the auditor, whichever is less.

Bill seeks to insert a proviso after sub-section (1) of section 147 of the  Companies Act to provide that in case of contravention of sub-sections (1), (5) to (8) and (11) of section 139, sub-section (4) of section 140, sub-section (4) of section 141, sub-sections (1) and (2) of section 142 and section 146 of the Companies Act, the company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day 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 failure, with a further penalty of two hundred rupees for each day subject to a maximum of one lakh rupees. The clause, accordingly, seeks to decriminalise relevant offences.

It further seeks to amend sub-section (2) of section 147 to insert reference to “section 143 [other than sub-section (12)]”, and “section 146” in the said sub-section.

As per Proposal decriminalisation of penalty for contraventions of following sections to be introduced-

Section 139 -Auditor appointment/rotation

Section 140(4) -Removal/resignation of auditor

Section 141(4) - Auditor disqualification

Section 142(1) & (2) -Auditor remuneration

Section 146- Auditor attendance in general meeting

Fixed penalty for company to be Rs.1,00,000 and for continuing default, Rs.500 per day up to maximum of Rs.5,00,000 to be levied.

Section 148- Central Government to Specify Audit of Items of Cost in Respect of Certain Companies

Section 148:- (3) The audit under sub-section (2) shall be conducted by a Cost Accountant who shall be appointed by the Board on such remuneration as may be determined by the members in such manner as may be prescribed:

Provided that no person appointed under section 139 as an auditor of the company shall be appointed for conducting the audit of cost records:

Provided further that the auditor conducting the cost audit shall comply with the cost auditing standards.

(8) If any default is made in complying with the provisions of this section,—

(a) the company and every officer of the company who is in default shall be punishable in the manner as provided in sub-section (1) of section 147;

(b) the cost auditor of the company who is in default shall be punishable in the manner as provided in sub-sections (2) to (4) of section 147.

Clause 48 of the Bill seeks to insert a new sub-section (1A) in section 148 of the Companies Act to empower the Central Government to provide standards of cost accounting by rules, after examination of recommendations of the Institute of Cost Accountants of India.

It further seeks to insert provisos in sub-section (3) to provide that a firm whose majority of partners practicing in India are qualified for appointment as cost auditor may be appointed by its firm name and to also provide that every partner of such firm shall be a person who is registered with a statutory institute or body established under a law in India having powers of such registration.

It also seeks to amend punishment provisions under sub-section (8) so as to provide for payment of penalty in case of such defaults under section 148 which are of technical or procedural nature. For contravention of serious nature the existing punishment is being sought to be retained. Accordingly, certain offences under the section are being decriminalised.

As per Proposal, Central Government to be empowered to prescribe standards of cost accounting by rules but only after examining recommendations of the Institute of Cost Accountants of India (ICMAI).

New proviso to be added in Section 148(3) prescribes that, firm whose majority of partners practicing in India are qualified for appointment as cost auditor to be appointed by its firm name and every partner of such firm to be a person registered with a statutory institute or body in India (e.g.,  ICMAI, ICAI, ICSI).   Decriminalisation for procedural/technical nature is proposed according to which penalty (monetary) will apply instead of punishment and for contravention of serious nature, the existing punishment to be retained.

Chapter XII- Meetings of Board and Its Power

Section 173- Meetings of Board

Section 173:- (5) A One Person Company, small company and dormant company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days:

Provided that nothing contained in this sub-section and in section 174 shall apply to One Person Company in which there is only one director on its Board of Directors.

Bill seeks to amend sub-section (5) of section 173 of the Companies Act to provide that a One Person Company, small company and dormant company shall be deemed to have complied with the provisions of the said section relating to meetings of Board of directors if at least one meeting of the Board of Directors has been conducted in a calendar year.

As per Proposal, One Person Company (OPC), Small Companies, and Dormant Companies to be deemed to have complied with Board meeting requirements if at least one Board Meeting is held in a calendar year.

Section 184- Disclosure of Interest by Director

Section 184:- (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.

Bill seeks to amend sub-section (1) of section 184 of the Companies Act by omitting the words “at the first meeting of the Board in every financial year or” to clarify that subsequent disclosures provided in such sub-section would be required only when there is any change in the disclosures made and not every financial year. 

As per Proposal, Directors will no longer required to give annual disclosure of interest every financial year. A director shall disclose his interest at the first Board meeting on his appointment and when there is any change in the disclosures already made.

Section 185- Loan to Directors, etc.

Section 185:- (1) 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,— (b) any firm in which any such director or relative is a partner.

Bill seeks to amend clause (b) of sub-section (1) of section 185 of the Companies Act by providing that after the words “any firm”, the words “or limited liability partnership” shall be inserted so that limited liability partnerships are also covered within the purview of such provisions.

As per Proposal, Limited Liability Partnership (LLP) is also to be covered under Section 185(1)(b) regarding loan to directors. Earlier restriction applied to firm in which director/relative is a partner.

Section 186-Loan and Investment by Company

Section 186:- (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 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.

(9) Every company giving loan or giving a guarantee or providing security or making an acquisition under this section shall keep a register which shall contain such particulars and shall be maintained in such manner as may be prescribed.

(10) The register referred to in sub-section (9) shall be kept at the registered office of the company and —

(a) shall be open to inspection at such office; and

(b) extracts may be taken therefrom by any member, and copies thereof may be furnished to any member of the company on payment of such fees as may be prescribed.

Bill seeks to amend sub-section (13) of section 186 of the Companies Act to exclude contraventions of sub-sections (9) and (10) of section 186 from the scope of punishment provided therein.

It further seeks to insert a new sub-section (14) to provide that 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. The clause seeks to decriminalise offences under sub-sections (9) and (10) of section 186.

Proposal seeks to exclude contraventions of sub sections (9) (Register of loans, Guarantee etc) and sub section (10) (Inspection of Register) of section 186 from the scope of punishment.

Separate penalty for violations of Section 186(9) and Section 186(10) introduced in which Company to have fixed penalty of Rs.1,00,000 and continuing contravention, Rs.500 per day up to maximum of Rs.5,00,000. Penalty for Officer in Default to have fixed penalty of Rs.25,000 and for continuing default, Rs.200 per day up to maximum of Rs.1,00,000.

Section 189- Register of Contracts or Arrangements in Which Directors are Interested

Section 189:- (5) Nothing contained in sub-section (1) shall apply to any contract or arrangement—

(a) for the sale, purchase or supply of any goods, materials or services if the value of such goods and materials or the cost of such services does not exceed five lakh rupees in the aggregate in any year; or

(b) by a banking company for the collection of bills in the ordinary course of its business.

(1) Every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which sub-section (2) of section 184 or section 188 applies, in such manner and containing such particulars as may be prescribed and after entering the particulars, such register or registers shall be placed before the next meeting of the Board and signed by all the directors present at the meeting.

Clause 62 of the Bill seeks to insert a new sub-section (5A) in section 189 of the Companies Act to provide that every company which fails to comply with the provisions of such section and the rules made thereunder shall be liable to a penalty of two lakh rupees.

As per Proposal, if a company fails to comply with Section 189 (Register of Contracts or Arrangements in which Directors are Interested) provisions, or Rules made thereunder, the company to be liable to a penalty of Rs.2,00,000.

Chapter XIII- Appointment and Remuneration of Key Managerial Personnel

Section 203- Appointment of Key Managerial Personnel

Bill seeks to insert a new section 203A in the Companies Act to provide for resignation of whole-time key managerial personnel (KMP) who are not a director in a company. Sub-section (1) of section 203A provides that a  whole-time KMP, 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 intimate the Registrar of such resignation in such form and manner and within such time, as may be provided by rules. It further provides that where the company fails to intimate, the said KMP may forward a copy of his resignation to the Registrar in such manner as may be provided by rules. Sub-section (2) of section 203A provides that the resignation of a KMP shall take effect from the date on which the notice is received by the company or the date, if any, specified by him in the notice, whichever is later. It further provides that such KMP shall be liable even after his resignation for the default for which he was liable during his tenure.

As per proposal, whole-time key managerial personnel (KMP) (who is not a director) can resign by giving written notice to the company. Board’s responsibility will be to take note of the resignation and inform the Registrar of Companies (ROC) within prescribed time and format. If company fails to inform ROC, then KMP himself can file the resignation with ROC. Earlier there was no provision for resignation of non-director KMPs.

Resignation will be effective from date of receipt by company or date specified in notice, whichever is later. After resignation KMP will be liable for any defaults committed during his tenure.

Section 100-Calling of Extraordinary General Meeting.

Bill seeks to insert a new sub-section (7) in section 100 of the Companies Act to allow companies to hold their extraordinary general meetings (EGMs) physically or through video conferencing or other audio-visual means, either wholly or partly, in such manner and subject to such terms and conditions, as may be provided by rules. It seeks to provide that if the number of members referred to in sub-section (2) of section 100 of the Companies Act requisition the meeting to be held in a hybrid mode, the company shall hold the meeting in such mode.

As per Proposal, companies to be allowed to hold their extraordinary general meetings (EGMs) physically or through video conferencing or other audio-visual means, either wholly or partly.

Section 204- Secretarial Audit for Bigger Companies

Section 204:- (1) 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.

(2) It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company.

(3) The Board of Directors, in their report made in terms of sub-section (3) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1).

(4) If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be liable to a penalty of two lakh rupees.

Bill seeks to amend section 204 of the Companies Act by substituting the words “secretarial auditors” for the words “company secretaries in practice”, wherever they occur.

It further seeks to insert a new sub-section (1A) to provide that a person shall be eligible for appointment as a secretarial auditor of a company only if he is a company secretary in practice, provided that that a firm, whereof majority of partners practicing in India who are qualified for appointment, may be appointed by its firm name.

It further seeks to provide that every partner of the firm shall be a person who has been registered with a statutory institute or body established under a law in India having powers of such registration

Proposal seeks to replace “Company Secretary in Practice (CS in Practice)” with “Secretarial Auditor”. And provides that a person eligible for appointment as a secretarial auditor of a company to be a company secretary in practice and a firm whereof majority of partners practicing in India and who are qualified for appointment, to be appointed by its firm name. Every partner of the firm must be registered with a statutory institute/body in India (e.g., ICSI, ICAI, ICMAI).