Full Text
REGISTERED NO. DL-(N)04/0007/2003-26
The Gazette of India
CG-DL-E-23032026-271201
EXTRAORDINARY
PART II — Section 2
PUBLISHED BY AUTHORITY
No. 7]
NEW DELHI, MONDAY, MARCH 23, 2026/CHAITRA 2, 1948 (Saka)
Separate paging is given to this Part in order that it may be filed as a separate compilation.
LOK SABНА
The following Bill was introduced in Lok Sabha on 23rd March, 2026:—
BILL No. 85 OF 2026
A Bill further to amend the Limited Liability Partnership Act, 2008 and the Companies
Act, 2013.
BE it enacted by Parliament in the Seventy-seventh Year of the Republic of
India as follows:—
CHAPTER I
PRELIMINARY
Short title and
commencement.
1. (1) This Act may be called the Corporate Laws (Amendment) Act, 2026.
(2) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint; and different dates may be appointed
for different provisions of this Act, and any reference in any provision to the
commencement of this Act shall be construed as a reference to the coming into force
of that provision.
CHAPTER II
AMENDMENTS TO THE LIMITED LIABILITY PARTNERSHIP Аст, 2008
Amendment of
section 2.
6 of 2009.
50 of 2019.
50 of 2019.
50 of 2019.
2. In the Limited Liability Partnership Act, 2008 (hereafter in this Chapter
referred to as the principal Act), in section 2, in sub-section (1),—
(i) after clause (m), the following clauses shall be inserted, namely:—
'(ma) “International Financial Services Centre” shall have the
same meaning as assigned to it in clause (g) of sub-section (1) of
section 3 of the International Financial Services Centres Authority
Act, 2019;
(mb) "International Financial Services Centres Authority” means
the Authority established under sub-section (1) of section 4 of the
International Financial Services Centres Authority Act, 2019;';
(ii) after clause (q), the following clause shall be inserted, namely:-
(qa) "permitted foreign currency” means a currency which may
be specified by the International Financial Services Centres Authority in
consultation with the Central Government;';
(iii) after clause (ta), the following clause shall be inserted, namely:—
'(tb) "Specified International Financial Services Centre LLP"
means a limited liability partnership which is set up in an International
Financial Services Centre and regulated by the International Financial
Services Centres Authority;'.
Amendment of
section 11.
3. In section 11 of the principal Act,-
(a) in sub-section (1), for clause (c), the following clauses shall be
substituted, namely:-
"(c) there shall be filed along with the incorporation document, a
statement in such form, as may be prescribed, by any one person who
subscribed his name to the incorporation document that all the
requirements of this Act and the rules made thereunder have been
complied with, in respect of incorporation and matters precedent and
incidental thereto;
(d) a declaration in the prescribed form by an advocate, a chartered
accountant, cost accountant or company secretary in practice, where a
limited liability partnership engaged such professionals in its formation
or incorporation.”;
(b) in sub-section (2), in clause (c), the following proviso shall be
inserted, namely:-
"Provided that a Specified International Financial Services Centre
LLP shall state its objects to undertake financial services activities, as
permitted under clause (e) of sub-section (1) of section 3 of the
International Financial Services Centres Authority Act, 2019 and any
matter considered necessary in furtherance thereof, in accordance with
the regulatory requirements specified by the International Financial
Services Centres Authority;”.
Amendment of
section 13.
4. In section 13 of the principal Act, in sub-section (1), the following proviso
shall be inserted, namely:-
"Provided that a Specified International Financial Services Centre LLP
shall have its registered office at an International Financial Services Centre, at
all times.".
Amendment of
section 15.
6. In section 23 of the principal Act, in sub-section (2), the following proviso
shall be inserted, namely:-
"Provided that in case of a class or classes of limited liability
partnerships regulated by the Securities and Exchange Board of India, or by
the International Financial Services Centres Authority, as may be prescribed,
the requirement of filing any changes in the limited liability partnership
agreement shall be such, as may be prescribed.".
Amendment of
section 25.
7. In section 25 of the principal Act, in sub-section (2), the following proviso
shall be inserted, namely:—
"Provided that in case of a class or classes of limited liability
partnerships regulated by the Securities and Exchange Board of India, or by
the International Financial Services Centres Authority, as may be prescribed,
there shall be a requirement to furnish the details of such changes to the
Registrar on an annual basis, in such form and manner, as may be prescribed.".
Amendment of
section 32.
8. In section 32 of the principal Act, in sub-section (2), the following provisos
shall be inserted, namely:-
"Provided that the monetary value of contribution of each partner of a
Specified International Financial Services Centre LLP shall be accounted for
and disclosed in a permitted foreign currency in its accounts:
Provided further that a limited liability partnership set up in an
International Financial Services Centre prior to the commencement of the
Corporate Laws (Amendment) Act, 2026 may convert monetary value of
contribution of each of its partners from Indian rupee to a permitted foreign
currency within such period and in such manner, as may be specified by the
International Financial Services Centres Authority, in consultation with the
Central Government:
Provided also that a limited liability partnership referred to in the first
proviso shall not be permitted after such commencement, to receive or accept
monetary contribution from any partner, without converting its monetary
contribution into a permitted foreign currency.".
Insertion of new
section 33A.
Provisions of
Companies Act,
2013 to apply
for valuation.
18 of 2013.
9. After section 33 of the principal Act, the following section shall be inserted,
namely:-
"33A. The provisions of section 247 of the Companies Act, 2013 shall
mutatis mutandis apply for the valuation, required to be made in respect of
contribution of a partner of a limited liability partnership, or of any property
or assets or net worth of such limited liability partnership, or its liabilities
under the provisions of this Act or rules made thereunder.".
Amendment of
section 34.
10. In section 34 of the principal Act,-
(a) in sub-section (1), the following provisos shall be inserted,
namely:-
"Provided that a Specified International Financial Services Centre
LLP, maintaining its contribution in a permitted foreign currency, shall
prepare and maintain its books of account, books and papers, financial
statement and all other records in the permitted foreign currency:
Provided further that a Specified International Financial Services
Centre LLP may be permitted to prepare its books of account, books and
papers, financial statement and other records in Indian rupee, if so
allowed by the International Financial Services Centres Authority.";
(b) in sub-section (5), for the word, brackets and figure
"sub-section (3)", the words, brackets and figures “sub-sections (1), (2) and
(3)" shall be substituted;
(c) in sub-section (6), the words, brackets and figures “sub-section (1),
sub-section (2) and" shall be omitted.
Amendment of
section 38.
11. In section 38 of the principal Act, -
(a) in sub-section (3), the words "or requisition” shall be omitted;
(b) after sub-section (3), the following sub-section shall be inserted,
namely:-
"(4) Any person who, without lawful excuse, fails to comply with
any requisition of the Registrar, other than summons, under this section,
shall be liable to a penalty of ten thousand rupees.".
Insertion of new
section 57A.
Conversion from
specified trust
into limited
liability
partnership.
2 of 1882.
12. After section 57 of the principal Act, the following section shall be
inserted, namely:—
"57A. A specified trust may convert into a limited liability partnership
in accordance with the provisions of this Chapter and the Fifth Schedule.
Explanation. For the purposes of this section, the term “specified trust"
means a trust established under the Indian Trusts Act, 1882 or under a Central
Act or State Act, and registered by the Securities and Exchange Board of India,
or by the International Financial Services Centres Authority, as the case may
be, having such activities as may be prescribed.".
Substitution of
new section for
section 58.
Registration and
effect of
conversion.
9 of 1932.
18 of 2013.
13. For section 58 of the principal Act, the following section shall be
substituted, namely:-
"58. (1) The Registrar, on satisfying that a firm, private company,
unlisted public company or a specified trust, as the case may be, has complied
with the provisions of the Second Schedule, the Third Schedule, the Fourth
Schedule or the Fifth Schedule, as the case may be, shall, subject to the
provisions of this Act and the rules made thereunder, register the documents
submitted under such Schedule and issue a certificate of registration in such
form, as the Registrar may determine, stating that the limited liability
partnership is, on and from the date specified in the certificate, registered
under this Act:
Provided that the limited liability partnership shall, within fifteen days
of the date of registration, inform the concerned Registrar of Firms or
Registrar of Companies or any other authority, as the case may be, with which
it was registered or established under the provisions of the Indian Partnership
Act, 1932 or the Companies Act, 2013, or any other law for the time being in
force, as the case may be, about the conversion and of the particulars of the
limited liability partnership in such form and manner as may be prescribed.
(2) Upon such conversion, the partners of the firm, the shareholders of
private company or unlisted public company, or the trustees of the specified
trust, as the case may be, the limited liability partnership to which such firm
or such company or such specified trust has converted, and the partners of the
limited liability partnership, shall be bound by the provisions of the Second
Schedule, the Third Schedule, the Fourth Schedule or the Fifth Schedule, as
the case may be, applicable to them.
(3) Upon such conversion, on and from the date of certificate of registration,
the effects of the conversion shall be such as specified in the Second Schedule, the
Third Schedule, the Fourth Schedule or the Fifth Schedule, as the case may be.
(4) Notwithstanding anything contained in any other law for the time
being in force, on and from the date of registration specified in the certificate
of registration issued under the Second Schedule, the Third Schedule, the
Fourth Schedule or the Fifth Schedule, as the case may be,—
(a) there shall be a limited liability partnership by the name
specified in the certificate of registration registered under this Act;
(b) all tangible (movable or immovable) and intangible property
vested in the firm, the company or the specified trust, as the case may
be, all assets, interests, rights, privileges, liabilities, obligations relating
to the firm, the company or the specified trust, as the case may be, and
the whole of the undertaking of firm, the company or the specified trust,
as the case may be, shall be transferred to and shall vest in the limited
liability partnership without further assurance, act or deed; and
(c) the firm, the company or the specified trust, as the case may be,
shall be deemed to be dissolved and removed from the records of the
Registrar of Firms or Registrar of Companies or such other authority, as
the case may be.".
Amendment of
section 68.
14. In section 68 of the principal Act, in sub-section (1), the following provisos
shall be inserted, namely:-
"Provided that the Central Government may require that a Specified
International Financial Services Centre LLP shall use permitted foreign
currency for the purpose of filing, recording or registering any document under
this section in such manner as may be prescribed:
Provided further that such Specified International Financial Services
Centre LLP shall pay fees, fines and penalties as provided in the relevant
provisions of this Act and the rules made thereunder in Indian rupees.”.
Insertion of new
section 68B.
Appeal against
decision of
Registrar.
15. After section 68A of the principal Act, the following section shall be
inserted, namely:-
"68B. Any person aggrieved by the decision of the Registrar under section
12 or section 16, may prefer an appeal to such officer of the Central Government,
in such form and manner, and within such period, as may be prescribed.”.
Amendment of
section 76A.
16. In section 76A of the principal Act,—
(a) after sub-section (1), the following sub-section shall be inserted,
namely:-
"(1A) A limited liability partnership or its partner or designated
partner may make an application in such form and manner and on
payment of such fees, as may be prescribed, under this section for
adjudication of penalty.";
(b) after sub-section (9), the following sub-section shall be inserted,
namely:-
"(10) On and from the commencement of the Corporate Laws
(Amendment) Act, 2026, where a provision in respect of any offence
provided in this Act has been amended to provide for adjudication under
this section,—
(a) the manner of withdrawal of the complaint; and
(b) the manner of transfer of such matter for adjudication
under this section,
in respect of such offence, whether pending in the Court or otherwise,
shall be dealt with in accordance with such Scheme as the Central
Government may notify in this behalf.".
Insertion of new
Fifth Schedule.
17. After the Fourth Schedule to the principal Act, the following Schedule
shall be inserted, namely:-
'THE FIFTH SCHEDULE
(See section 57A)
CONVERSION FROM SPECIFIED TRUST INTO LIMITED LIABILITY PARTNERSHIP
1. Interpretation.—In this Schedule, unless the context otherwise requires,—
(a) "convert", in relation to a specified trust converting into a limited
liability partnership, means a transfer of the property, assets, interests, rights,
privileges, liabilities, obligations and the undertaking of the specified trust
to the limited liability partnership in accordance with this Schedule;
(b) "investor" means an investor to the funds of the specified trust
in accordance with the relevant regulations made by the Securities and
Exchange Board of India, or by the International Financial Services
Centres Authority, as the case may be; and
(c) "specified trust" shall have the meaning assigned to it in the
Explanation to section 57A.
2. Conversion from specified trust into limited liability partnership.-
(1) A specified trust may convert into a limited liability partnership by
complying with the requirements as to the conversion set out in this Schedule.
(2) Upon such conversion, the trustees of the specified trust shall be
bound by the provisions of this Schedule that are applicable to them.
3. Eligibility for conversion. A specified trust may apply to convert
into a limited liability partnership in accordance with this Schedule, only if the
partners of the limited liability partnership into which the specified trust is to
be converted, are trustees of such specified trust and no one else.
4. Statements to be filed.-A specified trust may apply to convert into a
limited liability partnership by filing with the Registrar, —
(a) a statement by all of its trustees in such form and manner and
accompanied by such fee, as may be prescribed, containing the
following particulars, namely:-
(i) the name and registration number, if applicable, of the
specified trust;
(ii) the date on which the specified trust was established
under the Indian Trusts Act, 1882 (2 of 1882) or under a Central
Act or State Act;
(iii) the date on which the specified trust was registered with
the Securities and Exchange Board of India, or by the International
Financial Services Centres Authority, as the case may be, in terms
of the relevant regulations issued in this regard; and
(iv) the consent of three-fourths of the investors of the trust; and
(b) the incorporation document and statement referred to in section 11.
5. Registration of conversion. On receiving the documents referred to
in paragraph 4, the Registrar shall, subject to the provisions of this Act, register
the documents and issue a certificate of registration in such form, as the
Registrar may determine, stating that the limited liability partnership is, on
and from the date specified in the certificate, registered under this Act:
Provided that the limited liability partnership shall, within fifteen days
of the date of registration, inform, the concerned authority with which
specified trust was established under the provisions of the Indian Trusts
Act, 1882 (2 of 1882) or under a Central Act or State Act, about the conversion
and of the particulars of the limited liability partnership in such form and
manner, as may be prescribed.
6. Registrar may refuse to register.—(1) Nothing in this Schedule shall
be construed as to require the Registrar to register any limited liability
partnership, if he is not satisfied with the particulars or other information
furnished under the provisions of this Act:
Provided that an appeal may be made before the Tribunal in case of
refusal of registration by the Registrar.
(2) The Registrar may, in any particular case, require the documents
referred to in paragraph 4 to be verified in such manner, as he considers fit.
7. Effect of registration. On and from the date of registration specified
in the certificate of registration issued under paragraph 5,-
(a) there shall be a limited liability partnership by the name
specified in the certificate of registration registered under this Act;
(b) all tangible (movable and immovable) property as well as
intangible property vested in the specified trust, all assets, interests,
rights, privileges, liabilities, obligations relating to the specified trust
and the whole of the undertaking of the specified trust shall be
transferred to and shall vest in the limited liability partnership without
further assurance, act or deed; and
(c) the specified trust shall be deemed to be dissolved.
8. Registration in relation to property. If any property to which
sub-paragraph (b) of paragraph 7 applies is registered with any authority, the
limited liability partnership shall, as soon as practicable after the date of
registration, take all necessary steps as required by the relevant authority to
notify the authority of the conversion and of the particulars of the limited
liability partnership in such medium and form, as the authority may specify.
9. Pending proceedings. All proceedings by or against the specified trust
or its trustee, on behalf of the specified trust, which are pending in any Court or
Tribunal or before any authority on the date of registration may be continued,
completed and enforced by or against the limited liability partnership.
10. Continuance of conviction, ruling, order or judgment. Any
conviction, ruling, order or judgment of any Court, Tribunal, or other authority,
in favour of or against the specified trust, or its trustees, acting on behalf of the
specified trust may be enforced by or against the limited liability partnership.
11. Existing agreements.—Every agreement, to which the specified trust
was a party immediately before the date of registration, whether or not of such
nature that the rights and liabilities thereunder could be assigned, shall have
effect as from that date, as if
(a) the limited liability partnership were a party to such an
agreement instead of the specified trust; and
(b) for any reference to the specified trust, there were substituted
in respect of anything to be done on or after the date of registration a
reference to the limited liability partnership.
12. Existing contracts, etc. All deeds, contracts, schemes, bonds,
agreements, applications, instruments and arrangements, subsisting
immediately before the date of registration relating to the specified trust or to
which the specified trust is a party, shall continue in force on and after that date
as if they relate to the limited liability partnership and shall be enforceable by or
against the limited liability partnership, as if the limited liability partnership
were named therein or were a party thereto instead of the specified trust.
13. Continuance of employment. Every contract of employment to
which paragraph 11 or paragraph 12 applies, shall continue to be in force on
or after the date of registration, as if the limited liability partnership were the
employer thereunder instead of the specified trust.
14. Existing appointment, authority or power. (1) Every appointment
of the specified trust or its trustee in any role or capacity, which is in force
immediately before the date of registration, shall take effect and operate from
that date as if the limited liability partnership were appointed.
(2) Any authority or power conferred on the specified trust or its trustee,
which is in force immediately before the date of registration, shall take effect and
operate from that date as if it were conferred on the limited liability partnership.
15. Application of paragraphs 7 to 14.—The provisions of paragraphs 7
to 14 (both inclusive) shall apply to any approval, permit or licence issued to
the specified trust under any other Act, which is in force immediately before
the date of registration of the limited liability partnership, subject to the
provisions of such other Act under which such approval, permit or licence has
been issued.
16. Partner liable for liabilities and obligations of specified trust before
conversion. (1) Notwithstanding anything in paragraphs 7 to 14, every
trustee of a specified trust that has converted into a limited liability
partnership, shall continue to be personally liable (jointly and severally with
the limited liability partnership) for the liabilities and obligations of the
specified trust which were incurred prior to the conversion or which arose
from any contract entered into prior to the conversion.
(2) If any such trustee discharges any liability or obligation referred to
in sub-paragraph (1), he shall be entitled (subject to any agreement with the
limited liability partnership to the contrary) to be fully indemnified by the
limited liability partnership in respect of such liability or obligation.
17. Notice of conversion in correspondence.—(1) The limited liability
partnership shall ensure that for a period of twelve months commencing not later
than fourteen days after the date of registration, every official correspondence of
the limited liability partnership bears the following, namely:-
(a) a statement that it was, as from the date of registration,
converted from a specified trust into a limited liability partnership; and
(b) the name and registration number, if applicable, of the specified
trust, from which it was converted.
(2) Any limited liability partnership which contravenes the provisions of
sub-paragraph (1) shall be punishable with fine which shall not be less than ten
thousand rupees but which may extend to one lakh rupees and with a further fine
which shall not be less than fifty rupees but which may extend to five hundred
rupees for every day after the first day after which the default continues.'.
CHAPTER III
AMENDMENTS TO THE COMPANIES ACT, 2013
Amendment of
section 2.
18 of 2013.
18. In the Companies Act, 2013 (hereafter in this Chapter referred to as the
principal Act), in section 2,—
(i) in clause (28), for the words "the Cost and Works Accountants", the
words "the Cost Accountants" shall be substituted;
(ii) in clause (41), after the third proviso, the following proviso shall be
inserted, namely:—
"Provided also that the Central Government may, on an application
made in such form and manner as may be prescribed, by a company or
body corporate referred to in the first proviso or, on commercial
considerations, by any other company or body corporate, allow the
company or body corporate to realign its financial year as the period
ending on the 31st day of March of the following year;";
(iii) after clause (73), the following clause shall be inserted, namely:—
'(73A) “Regional Director” means a person appointed by the
Central Government as a Regional Director for the purposes of this Act
and includes an Additional Regional Director or a Joint Regional
Director or a Deputy Regional Director under section 396;';
(iv) after clause (74), the following clause shall be inserted, namely:-
'(74A) “registered valuer” means a person who holds a certificate
of registration granted under section 247;';
(v) in clause (85),—
(a) in sub-clause (i), for the words “ten crore rupees", the words
“twenty crore rupees” shall be substituted;
(b) in sub-clause (ii), for the words “one hundred crore rupees",
the words "two hundred crore rupees" shall be substituted.
Amendment of
section 4.
19. In section 4 of the principal Act, in sub-section (5), in clause (ii), in
sub-clause (a), for the words “which may extend to one lakh rupees", the words
"of fifty thousand rupees” shall be substituted.
Amendment of
section 7.
20. In section 7 of the principal Act, in sub-section (1), for clause (b), the
following clauses shall be substituted, namely:—
"(b) a declaration in the prescribed form by a person named in the articles
as a director, manager or secretary of the company, that all the requirements of
this Act and the rules made thereunder in respect of registration and matters
precedent or incidental thereto have been complied with;
(ba) a declaration in the prescribed form by an advocate, a chartered
accountant, cost accountant or company secretary in practice, where a
company engaged such professionals in its formation or incorporation;".
Insertion of new
section 12A.
Certain class or
classes of
companies to
maintain modes
of
communication
and provide
particulars.
21. After section 12 of the principal Act, the following section shall be
inserted, namely:—
"12A. (1) The class or classes of companies, as may be prescribed, shall
maintain a website, an e-mail address and other modes of communication in
such form and manner, as may be prescribed.
(2) The details of website, e-mail address and other modes of communication
referred to in sub-section (1) and the changes, if any, therein, shall be intimated to
the Registrar in such form and within such period, as may be prescribed.".
Amendment of
section 20.
22. In section 20 of the principal Act, in sub-section (2), for the proviso, the
following provisos shall be substituted, namely:-
"Provided that the service of such class of documents by such class or
classes of companies, as may be prescribed, to its members, shall take place only
through electronic mode, in such manner as may be prescribed, and such service
shall be deemed to be sufficient compliance for the purposes of this Act:
Provided further that a member may request for delivery of any
document through a particular mode, for which he shall pay such fee as may
be determined by the company in its general meeting.".
Amendment of
section 24.
23. In section 24 of the principal Act, in sub-section (2), the words, brackets
and figures "and the matters delegated to it under proviso to sub-section (1) of
section 458" shall be omitted.
Amendment of
section 26.
24. In section 26 of the principal Act, for sub-section (9), the following
sub-section shall be substituted, namely:-
"(9) If a prospectus is issued in contravention of the provisions of this
section, the company and every person who is knowingly a party to the issue
of such prospectus shall be liable to a penalty of two lakh rupees.”.
Amendment of
section 40.
25. In section 40 of the principal Act,-
(a) in sub-section (5), for the words "this section", the word, brackets
and figure "sub-section (3)" shall be substituted;
(b) after sub-section (5), the following sub-section shall be inserted,
namely:-
"(5A) If a default is made in complying with the provisions of this
section, other than sub-section (3), the company shall be liable to a
penalty of twenty-five lakh rupees and every officer of the company who
is in default shall be liable to a penalty of two lakh rupees.".
Amendment of
section 42.
26. In section 42 of the principal Act,-
(a) in the marginal heading, for the word "shares", the word “securities"
shall be substituted;
(b) in sub-section (2), after the words "employees stock option", the
words "or such other scheme linked to the value of the share capital of a
company," shall be inserted;
(c) in sub-section (10), for the words “which may extend to”, the words
"equivalent to" shall be substituted.
Insertion of new
section 43A.
Share capital of
company under
International
Financial
Services Centre.
27. After section 43 of the principal Act, the following section shall be
inserted, namely:—
'43A. (1) A company, set up and incorporated in the International
Financial Services Centre, shall issue and maintain its share capital in a
permitted foreign currency:
Provided that a company set up and incorporated in the International
Financial Services Centre prior to the commencement of the Corporate Laws
(Amendment) Act, 2026 may convert its share capital from Indian rupee to a
permitted foreign currency within such period and in such manner, as may be
specified by regulations by the International Financial Services Centres
Authority, in consultation with the Central Government:
Provided further that a company referred to in the first proviso shall not
be permitted, after the commencement of the Corporate Laws (Amendment)
Act, 2026, to issue any share capital without converting its share capital into
a permitted foreign currency.
(2) A company referred to in sub-section (1), maintaining its share
capital in a permitted foreign currency shall prepare and maintain its books of
account, and other relevant books and papers, financial statements and all
other records in the permitted foreign currency:
Provided that if the International Financial Services Centres Authority
permits, such company may present such books of account and other relevant
books and papers, financial statements and other records in Indian rupee.
(3) The Central Government may, in such manner as may be prescribed,
require that a company referred to in sub-section (1) shall use permitted
foreign currency for the purpose of filing, submitting or delivering any
documents under section 398.
(4) Every company referred to in sub-section (1) shall pay fees, fines and
penalties under this Act and the rules made thereunder in Indian rupees.
(5) In this section, the expressions—
(a) "International Financial Services Centre" shall have the same
meaning as assigned to it under clause (g) of sub-section (1) of
section 3 of the International Financial Services Centres Authority
Act, 2019;
50 of 2019.
(b) "International Financial Services Centres Authority" shall have
the same meaning as assigned to it under clause (b) of sub-section (1) of
section 3 of the International Financial Services Centres Authority
Act, 2019; and
50 of 2019.
(c) "permitted foreign currency” means a currency which may be
specified by the International Financial Services Centres Authority in
consultation with the Central Government.'.
Amendment of
section 62.
28. In section 62 of the principal Act, in sub-section (1), in clause (b), after the
words "under a scheme of employees' stock option", the words “or under such other
scheme linked to the value of the share capital of the company" shall be inserted.
Amendment of
section 68.
29. In section 68 of the principal Act,-
(a) in sub-section (2), —
(i) in clause (c), for the proviso, the following provisos shall be
substituted, namely:-
"Provided that in case of such class or classes of companies, as
may be prescribed, the buy-back may be up to such per cent. of
aggregate of paid-up capital and free reserves, as may be prescribed:
Provided further that in respect of the buy-back of equity
shares in any financial year, the reference to twenty-five per cent.
or such other per cent., as the case may be, in this clause shall be
construed with respect to its total paid-up equity capital in that
financial year;";
(ii) in clause (g), after the existing proviso, the following proviso
shall be inserted, namely:-
"Provided further that such class or classes of
companies, as may be prescribed, may make up to two offers of
buy-backs within a period of one year reckoned from the date of
the closure of the preceding offer of buy-back, if any, if 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.";
(b) in sub-section (5), in clause (c), after the words “sweat equity", the
words, brackets, letter and figures “, 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" shall be inserted;
(c) in sub-section (6), the words "and verified by an affidavit" shall be
omitted;
Amendment of
section 77.
(d) in sub-section (8), after the words "sweat equity", the words,
brackets, letter and figures ", 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,"
shall be inserted;
(e) in sub-section (11),—
(i) for the words “the company shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to three lakh
rupees", the words "it shall be liable to a penalty of twenty-five lakh
rupees if it is a listed company and two lakh rupees in case it is any other
company" shall be substituted;
(ii) for the words “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", the words, brackets and letters-
"who is in default shall
(a) be liable to a penalty of five lakh rupees in case of
a listed company; and
(b) be liable to a penalty of two lakh rupees in case of
any other company"
shall be substituted;
(f) in Explanation I, after the words "employees' stock option", the
words, brackets, letter and figures “, or any option under 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,” shall be inserted.
30. In section 77 of the principal Act, in sub-section (1), after the second
proviso, the following proviso shall be inserted, namely:—
'Provided also that for such class or classes of companies, as may be
prescribed, the period of "sixty days" referred to in clause (b) of the second
proviso shall be read as “one hundred and twenty days":".
Amendment of
section 88.
31. In section 88 of the principal Act, after sub-section (2), the following
sub-section shall be inserted, namely:-
"(2A) 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).".
Amendment of
section 96.
32. In section 96 of the principal Act, after sub-section (2), the following
sub-section shall be inserted, namely:-
"(3) A company may hold its annual general meeting 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 prescribed:
Provided that if the number of members referred to in sub-section (2) of
section 100 requisition the meeting to be held in a hybrid mode, the company
shall hold the meeting in such mode:
Provided further that every company shall hold its annual general
meeting in physical mode at least once in every three years.".
Amendment of
section 99.
33. In section 99 of the principal Act,-
(a) in the marginal heading, for the words and figures “Punishment for
default in complying with provisions of sections 96 to 98", the words and
figures "Penalty for default in complying with provisions of section 96" shall
be substituted;
Amendment of
section 100.
(b) the words and figures “or section 97 or section 98 or in complying
with any directions of the Tribunal" shall be omitted;
(c) for the words “punishable with fine which may extend to one lakh
rupees and in the case of a continuing default, with a further fine which may
extend to five thousand rupees for every day during which such default
continues", the words "liable to a penalty of one lakh rupees and in case of
continuing default, with a further penalty of five thousand rupees for each day
during which such default continues, subject to a maximum of two lakh rupees
in case of a company and fifty thousand rupees in case of an officer who is in
default" shall be substituted.
34. In section 100 of the principal Act, after sub-section (6), the following
sub-section shall be inserted, namely:-
"(7) A company may hold its extraordinary general meeting 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 prescribed:
Provided that if the number of members referred to in sub-section (2)
requisition the meeting to be held in a hybrid mode, the company shall hold
the meeting in such mode.".
Amendment of
section 101.
35. In section 101 of the principal Act, in sub-section (1),—
(a) in the proviso, for the words "Provided that", the following words
shall be substituted, namely:-
"Provided that the extraordinary general meetings conducted
wholly through video conferencing or audio-visual means under
sub-section (7) of section 100, may be called by giving a notice of not
less than seven days, or such other period, and in such manner, as may
be prescribed:
Provided further that";
(b) in the second proviso, for the words “Provided further”, the words
"Provided also" shall be substituted.
Amendment of
section 124.
36. In section 124 of the principal Act,-
(a) in sub-section (5), after the words “seven years from the date of such
transfer", the words, brackets and figure ", along with any dividend which has
not been paid or claimed where such shares have been transferred by the
company under sub-section (6),” shall be inserted;
(b) in sub-section (6), —
(i) after the word “Fund”, the word "Authority” shall be inserted;
(ii) in the proviso, after the word "Fund", the word “Authority"
shall be inserted;
(iii) in the Explanation, after the word "Fund", the word
"Authority" shall be inserted.
Amendment of
section 125.
37. In section 125 of the principal Act, —
(a) in sub-section (2), —
(i) in clause (m), the word "and" occurring at the end shall be
omitted;
(ii) after clause (m), the following clause shall be inserted,
namely:-
"(ma) the amount in respect of shares bought back and
extinguished, remaining unpaid or unclaimed for seven or more
years; and";
Amendment of
section 128.
(b) in sub-section (3), for clause (a), the following clause shall be
substituted, namely:-
"(a) the refund in respect of unclaimed dividends and amounts
referred to in clauses (h) to (n) of sub-section (2), which is due for refund;";
(c) in sub-section (4), for the words, brackets and figure “may apply to
the authority constituted under sub-section (5)", the words “may apply, in
accordance with such procedure and on submission of such documents, as may
be prescribed" shall be substituted;
(d) after sub-section (11), the following sub-section shall be inserted,
namely:-
"(12) The authority may, by notification, delegate to any member,
officer or any other person subject to such conditions, if any, as may be
specified in such notification, any of its powers and functions under this
Act as it deems necessary.".
38. In section 128 of the principal Act, in sub-section (6),—
(a) for the words “be punishable with fine which shall not be less than
fifty thousand rupees but which may extend to five lakh rupees", the words
"be liable to a penalty of five lakh rupees in case of a listed company and fifty
thousand rupees in case of any other company" shall be substituted;
(b) the following proviso shall be inserted, namely:—
"Provided that where the contravention relates to sub-section (1)
or sub-section (5), the person referred to in this sub-section shall be
liable to a penalty of twenty lakh rupees in case of a listed company and
five lakh rupees in case of any other company.”.
Amendment of
section 131.
39. 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.
Amendment of
section 132.
40. In section 132 of the principal Act,-
(a) for sub-section (1A), the following sub-section shall be substituted,
namely:-
"(1A) The National Financial Reporting Authority shall be a body
corporate by the name aforesaid, having perpetual succession and a
common seal, with power, subject to the provisions of this Act, to
acquire, hold and dispose of property, both movable and immovable, and
to contract, and shall, by the said name, sue or be sued.";
(b) in sub-section (2), in clause (a), after the words “class of companies",
the words "or bodies corporate" shall be inserted;
(c) sub-section (3A) shall be omitted;
(d) after sub-section (3B), the following sub-sections shall be inserted,
namely:-
"(3C) Save as otherwise provided, the Chairperson shall have the
powers of general superintendence and direction of the affairs of the
National Financial Reporting Authority and may exercise all powers and
do all acts and things as may be delegated to him by the executive body.
(3D) The executive body may, by general or special order in
writing, delegate to the Chairperson or any full-time Member or officer
of the National Financial Reporting Authority, or to a Committee
comprising of one or more of the above, subject to such conditions, if
any, as may be specified in the order, such powers of the executive body
under this Act as may be deemed necessary.";
38 of 1949.
(e) in sub-section (4), —
(i) in clause (a), for the words "in such manner as may be
prescribed", the words “, as may be prescribed, and in such manner as
may be specified by regulations by the said Authority" shall be
substituted;
(ii) in clause (c),—
(I) in the opening portion, after the words “have the power to
make order for", the words "one or more of the following,
namely:" shall be inserted;
(II) after sub-clause (B), the following sub-clauses shall be
inserted, namely:—
"(C) issuing an advisory, censure or warning to the
member or the firm;
(D) requiring additional professional training of the
member or individual partners or employees of the firm;
(E) referring the matter to the Central Government for
taking action under the provisions of this Act or rules made
thereunder.";
(iii) for the Explanation, the following Explanation shall be
substituted, namely:-
'Explanation. For the purposes of this sub-section, the
expression "professional or other misconduct" shall include the
meaning assigned to it under section 22 of the Chartered
Accountants Act, 1949, and shall further include such acts or
omissions which constitute a contravention of the provisions of
this Act, or the rules or regulations made thereunder, in so far as
such provisions relate to matters within the jurisdiction, functions,
or regulatory remit of the National Financial Reporting
Authority.';
(f) after sub-section (4), the following sub-section shall be inserted,
namely:-
"(4A) Any person who fails to comply with any order of the
National Financial Reporting Authority under sub-section (4), or who
fails to pay the penalty imposed under clause (c) of the said sub-section,
within a period of ninety days from the date of receipt of the order, or
within such other period as stated in the order, shall,—
(a) where the person against whom penalty has been
imposed, fails to pay the penalty, without prejudice to the penalty
that such person is liable to pay, be punishable-
(i) with imprisonment which may extend to six months
or with fine which shall not be less than one lakh rupees but
which may extend to five lakh rupees, if such person is an
individual; or
(ii) with fine which shall not be less than five lakh
rupees but which may extend to twenty-five lakh rupees, if
such person is a firm; and
(b) be liable for debarment under sub-clause (B) of clause (c)
of sub-section (4) for such further period as the National Financial
Reporting Authority may consider appropriate.";
Insertion of new
sections 132A,
132B, 132C,
132D, 132E,
132F, 132G,
132H, 132-I,
132J and 132K.
Intimation of
registration
details of
auditors and
filing of returns.
(g) in sub-section (10), for the word “prescribed", the words “specified
by regulations by the said Authority" shall be substituted;
(h) in sub-section (11),—
(i) for the words "The Central Government", the words "The
National Financial Reporting Authority" shall be substituted;
(ii) for the words "of functions by the National Financial Reporting
Authority under this Act and the”, the words "of its functions under this
Act and the salary, allowances and other" shall be substituted;
(iii) for the word "prescribed", the words "specified by regulations
by the said Authority" shall be substituted;
(i) after sub-section (15), the following sub-sections shall be inserted,
namely:-
"(16) No act or proceeding of the National Financial Reporting
Authority shall be invalid merely by the reason of
(a) any vacancy in, or any defect in the constitution of such
Authority; or
(b) any defect in the appointment of a person acting as a
member of such Authority; or
(c) any irregularity in the procedure of such Authority not
affecting the merits of the case.
(17) The National Financial Reporting Authority may, in such manner
as may be specified by regulations, engage such number of experts and
professionals who have special knowledge of, and experience in, accounting
standards, auditing standards, economics, law, business or such other
disciplines related to its functions, as it deems necessary to assist the said
Authority in the discharge of its functions under this Act.".
41. After section 132 of the principal Act, the following sections shall be
inserted, namely:—
"132A. (1) With effect from such date as the Central Government may,
by notification, specify in this behalf, no individual or firm shall be appointed
as auditor under section 139 in respect of companies or class of companies or
bodies corporate referred to in clause (a) of sub-section (4) of section 132,
unless the individual or firm intimates the details of his or its registration with
the Institute of Chartered Accountants of India, to the National Financial
Reporting Authority within such time, in such manner and along with such
fees, as may be prescribed.
(2) The auditors of companies or class of companies or bodies corporate
referred to in sub-section (1), shall file such documents or returns or
information with the National Financial Reporting Authority, in such form and
manner, within such period, and on payment of such fees, as may be specified
by regulations by the said Authority.
(3) A person, required to furnish any document or return or any other
information under sub-section (2), who fails to furnish any document or return
or any other information, shall be liable to penalty of not less than twenty-five
thousand rupees, but which may extend to five hundred rupees for each day
during which such default continues, subject to a maximum of twenty-five
lakh rupees, if such person is an auditor or an audit firm.
Fund of
Authority.
Power of
Authority to
issue directions.
Power of
Authority to
impose penalty.
(4) If any person, while fulfilling his obligations under this section, —
(a) makes a statement or furnishes any document or return or any
other information which he knows or has reason to believe to be false in
any material particular; or
(b) omits to state any material facts or particulars knowing them to
be material; or
(c) wilfully alters, suppresses or destroys any document, return or
information, which is required to be furnished,
then, without prejudice to any other action which may be taken under any law
for the time being in force, such person shall be liable to a penalty of not less
than fifty thousand rupees, but which may extend to one thousand rupees for
each day during which such default continues, subject to a maximum of fifty
lakh rupees, if such person is an auditor or an audit firm.
132B. (1) The Central Government may, after due appropriation made
by Parliament by law in this behalf, make to the National Financial Reporting
Authority, grants of such sums of money as the Central Government may think
fit for being utilised for the purposes of this Act.
(2) There shall be constituted a Fund, to be called the National Financial
Reporting Authority Fund, wherein the following shall be credited, namely:—
(a) grants made by the Central Government for the purposes of the
National Financial Reporting Authority Fund;
(b) all fees received by the said Authority under this Act;
(c) all sums received by the said Authority from such other sources
as may be decided by the Central Government; and
(d) interest or other income received out of the investments made
from the National Financial Reporting Authority Fund.
(3) The Fund shall be applied for meeting the expenses of the National
Financial Reporting Authority for the discharge of its functions and for the
purposes of this Act and for such other purposes, as may be prescribed.
132C. (1) In exercise of its functions under this Act, where the National
Financial Reporting Authority is satisfied that it is necessary in public interest
or the interest of investors or creditors or other persons concerned, it may give
such directions to auditors of companies, class of companies or bodies
corporate referred to in clause (a) of sub-section (4) of section 132, as it may
consider appropriate.
(2) Whoever fails to comply with any direction given under
sub-section (1), shall be liable to a penalty of not less than fifty thousand
rupees but which may extend to one thousand rupees for each day during
which such default continues, subject to a maximum of fifty lakh rupees in
case of an auditor, or one crore rupees in case of an audit firm.
132D. (1) The National Financial Reporting Authority may, after
holding inquiry, in such manner as may be prescribed and after giving a
reasonable opportunity of being heard, impose such penalty under
sub-section (4) of section 132A or sub-section (2) of section 132C, as it may
consider appropriate.
(2) While holding an inquiry, the National Financial Reporting Authority
shall have power to summon and enforce the attendance of any person
acquainted with the facts and circumstances of the case to give evidence or to
Civil courts not
to have
jurisdiction.
Protection of
action taken in
good faith.
Power of Central
Government to
give directions
to Authority.
Power of Central
Government to
supersede
Authority.
produce any document, which in the opinion of the said Authority, may be
useful for or relevant to the subject matter of the inquiry and if, on such inquiry,
it is satisfied that the person has failed to comply with the provisions of any of
the sections specified in sub-section (1), it may impose such penalty as it
considers appropriate in accordance with the provisions of any of those sections.
(3) The amount of any penalty imposed under this section, if not paid, may
be recovered by the National Financial Reporting Authority, in such manner as
may be prescribed, as if it were an arrear of land revenue.
(4) All sums realised by way of penalties under this section shall be
credited to the Consolidated Fund of India.
(5) Any person aggrieved by an order of the National Financial Reporting
Authority under this section may prefer an appeal before the Appellate Tribunal
within a period of forty-five days from the date on which a copy of the order of
said Authority is made available, in such manner and on payment of such fee,
as may be prescribed.
132E. No civil court shall have jurisdiction to entertain any suit or
proceeding in respect of any matter which the National Financial Reporting
Authority is empowered to determine by or under this Act and no injunction
shall be granted by any court or other authority in respect of any action taken or
to be taken by the said Authority in pursuance of any power conferred by or
under this Act.
132F. No suit, prosecution or other legal proceeding shall lie against the
Central Government or the National Financial Reporting Authority or the
chairperson or any member or any officer or other employee of Authority for
anything which is in good faith done or intended to be done under this Act or
the rules or regulations made thereunder.
132G. Without prejudice to the provisions of this Act, the National
Financial Reporting Authority shall, in exercise of its powers or the performance
of its functions under this Act, be bound by such directions on questions of
policy, as the Central Government may give in writing to it from time to time:
Provided that the Authority shall, as far as practicable, be given an
opportunity to express its views before any direction is given under this section:
Provided further that the decision of the Central Government, on whether
a question is one of policy or not, shall be final.
132H. (1) If at any time, the Central Government is of the opinion—
(a) that on account of grave emergency, the National Financial
Reporting Authority is unable to discharge the functions and duties
imposed on it by or under the provisions of this Act; or
(b) that the National Financial Reporting Authority has persistently
not complied with any direction given by the Central Government under
this Act or in the discharge of the functions and duties imposed on it by or
under the provisions of this Act, and as a result of such non-compliance,
the financial position or the administration of such Authority has
deteriorated; or
(c) that circumstances exist which render it necessary in the public
interest so to do,
the Central Government may, by notification, supersede the National Financial
Reporting Authority for such period, not exceeding six months, as may be
specified in the notification.
(2) Upon the publication of a notification under sub-section (1)
superseding the National Financial Reporting Authority,—
(a) the Chairperson and all the members shall, as from the date of
supersession, vacate their offices as such;
(b) all the powers, functions and duties which may, by or under the
provisions of this Act, be exercised or discharged by or on behalf of the
National Financial Reporting Authority shall, until the said Authority is
reconstituted under sub-section (3), be exercised and discharged by such
person or persons as the Central Government may direct; and
(c) all properties owned or controlled by the National Financial
Reporting Authority shall, until the said Authority is reconstituted under
sub-section (3), vest in the Central Government.
(3) On the expiration of the period of supersession specified in the
notification issued under sub-section (1), the Central Government may
reconstitute the National Financial Reporting Authority by a fresh appointment,
and in such case, any person or persons who vacated their offices under
clause (a) of the said sub-section, shall not be deemed disqualified for
appointment:
Provided that the Central Government may, at any time, before the
expiration of the period of supersession, take action under this sub-section.
(4) The Central Government shall cause a notification issued under
sub-section (1) and a full report of any action taken under this section and the
circumstances leading to such action to be laid before each House of Parliament
at the earliest.
Levy of fees or
other charges by
Authority.
132-I. (1) For the purposes of carrying out its functions under this Act, the
National Financial Reporting Authority may levy such fees or other charges as
may be specified by it by regulations, on the auditors of companies or class of
companies or bodies corporate referred to in clause (a) of sub-section (4) of
section 132.
(2) The payment of such fees or other charges shall be in such manner as
may be specified by regulations by the National Financial Reporting Authority.
Power of
Authority to
make
regulations.
132J. (1) The National Financial Reporting Authority may, by
notification, make regulations consistent with this Act and the rules made
thereunder, for carrying out its functions under this Act.
(2) In particular, and without prejudice to the generality of the foregoing
powers, such regulations may provide for all or any of the following matters,
namely:-
(a) the manner of investigation under clause (a) of sub-section (4)
of section 132;
(b) the place and time of meetings of the Authority and
the procedure to be followed at such meetings under
sub-section (10) of section 132;
(c) the manner of appointment, salary, allowances and other terms
and conditions of service of the secretary and employees of the Authority
under sub-section (11) of section 132;
(d) the manner of engagement of experts and professionals under
sub-section (17) of section 132;
(e) the documents, returns, or information, and the form, manner,
period, and fees for filing the same under sub-section (2) of section 132A;
Transparency in
making
regulations.
(f) the manner of recovery of the amount of penalty under
sub-section (3) of section 132D; and
(g) the fees or other charges and the manner of payment thereof
under section 132-I.
(3) Every regulation made under this section shall be laid, as soon as may
be after it is made, before each House of Parliament, while it is in session, for a
total period of thirty days which may be comprised in one session or in two or
more successive sessions, and if, before the expiry of the session immediately
following the session or the successive sessions aforesaid, both Houses agree in
making any modification in the regulation, or both Houses agree that the
regulation should not be made, the regulation shall thereafter have effect only in
such modified form or be of no effect, as the case may be; so, however, that any
such modification or annulment shall be without prejudice to the validity of
anything previously done under that regulation.
132K. The Authority shall, prior to issuing regulations under section 132J,
ensure transparency by-
(a) publishing the draft regulations along with all relevant details on
its website and inviting public comments for such period as may be
specified therein; and
(b) reviewing such regulations at least once in three years:
Provided that if the Authority is of the opinion that it is necessary or
expedient to make, or amend, any regulations urgently in public interest, or
where the subject matter of the regulations relates solely to the internal
functioning of the Authority, it may, for reasons to be recorded in writing for
doing so, make or amend such regulations without following the procedure
specified in clauses (a).".
Amendment of
section 134.
42. In section 134 of the principal Act, in sub-section (3),—
(i) after clause (f), the following clause shall be inserted, namely:—
"(fa) explanations or comments by the Board on every observation
or comment of the auditors on financial transactions or matters which have
any adverse effect on the functioning of the company under clause (f) of
sub-section (3) of section 143 and any qualification, reservation or adverse
remark relating to the maintenance of accounts and other matters
connected therewith under clause (h) of the said sub-section in such form,
as may be prescribed.";
(ii) after clause (p), the following clause shall be inserted, namely:—
"(pa) composition of the Audit Committee and where the Board had
not accepted any recommendation of the Audit Committee, a statement
along with the reasons therefor;".
Amendment of
section 135.
43. In section 135 of the principal Act,—
(a) in sub-section (1), for the words “five crore”, the words “ten crore, or
such sum as may be prescribed" shall be substituted;
(b) in sub-section (6), —
(i) for the words, brackets and figure “amount remaining unspent
under sub-section (5)", the words, brackets and figure “unspent amount
under sub-section (5)" shall be substituted;
(ii) for the words, “company within a period of thirty days", the
words "company within a period of ninety days" shall be substituted;
(c) in sub-section (9), for the words "fifty lakh rupees", the words
"one crore rupees or such higher amount as may be prescribed" shall be
substituted;
(d) after sub-section (9), the following sub-section shall be inserted,
namely:-
"(10) Such class or classes of companies which fulfil such
conditions, as may be prescribed, shall not be required to comply with the
provisions of this section.".
Amendment of
section 139.
44. In section 139 of the principal Act, after sub-section (11), the following
sub-section shall be inserted, namely:-
"(12) Such class or classes of companies which fulfil such
conditions as may be prescribed shall not be required to appoint auditors under
this Chapter.".
Amendment of
section 141.
45. In section 141 of the principal Act, in sub-section (1), after the proviso, the
following proviso shall be inserted, namely:-
"Provided further 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.".
Amendment of
section 144.
46. In section 144 of the principal Act, in the proviso, for the words "Provided
that", the following shall be substituted, namely:—
"Provided that an auditor or audit firm of such class or classes of
companies, as may be prescribed, shall not provide, directly or indirectly, any
non-audit services to the company or its holding company or subsidiary:
Provided further 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:
Provided also that".
Amendment of
section 147.
47. In section 147 of the principal Act,—
(a) in sub-section (1), the following proviso shall be inserted, namely:—
"Provided that in case of contravention of the provisions 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, 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, after the first during which
such failure 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
failure, with a further penalty of two hundred rupees for each day, after
the first during which such failure continues, subject to a maximum of one
lakh rupees.";
(b) in sub-section (2), for the words and figures “section 139, section 144
or section 145", the words, figures and brackets "section 139, section 143 [other
than sub-section (12)], section 144, section 145 or section 146" shall
be substituted.
Amendment of
section 148.
23 of 1959.
48. In section 148 of the principal Act, -
(a) after sub-section (1), the following sub-section shall be inserted,
namely:-
"(1A) The Central Government may provide for such standards, as
may be prescribed, of cost accounting or any addendum thereto, after
examination of recommendations of the Institute of Cost Accountants of
India, constituted under the Cost Accountants Act, 1959.";
(b) in sub-section (3), —
(i) in the proviso, for the words "Provided that", the following shall
be substituted, namely:-
"Provided that a firm whereof majority of partners practising
in India who are qualified for appointment, may be appointed by
its firm name to be the cost auditor of a company:
Provided further that every partner of the 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:
Provided also that";
(ii) in the second proviso, for the words “Provided further", the
words "Provided also" shall be substituted;
(iii) in the Explanation, for the words "the Cost and Works
Accountants", the words "the Cost Accountants" shall be substituted;
(c) for sub-section (8), the following sub-sections shall be substituted,
namely:-
"(8) If the managing director, the whole-time director in charge of
finance, the Chief Financial Officer or any other person of a company
charged by the Board with duty of complying with the provisions of
sub-section (1), contravenes such provisions, such managing director,
whole-time director in charge of finance, Chief Financial Officer or such
other person of the company, shall be liable to a penalty of five lakh
rupees in case of a listed company and fifty thousand rupees in case of
any other company.
(9) If any default is made in complying with the provisions of
sub-section (3) relating to appointment of Cost Accountant by the Board
on such remuneration as may be determined by the members, or
sub-section (6) or sub-section (7), the company shall be liable to a
penalty of ten thousand rupees and in case of continuing default, with a
further penalty of one hundred rupees for each day during which such
failure continues, subject to a maximum of two lakh rupees and every
officer of the company who is in default shall be liable to a penalty of
ten thousand rupees and in case of continuing default, with a further
penalty of one hundred rupees for each day, after the first during which
such default continues, subject to a maximum of fifty thousand rupees.
(10) If any default is made in complying with provisions of this
section, other than those referred to in sub-sections (8) and (9), —
(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; and
(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
the said section.".
Amendment of
section 149.
49. In section 149 of the principal Act, —
(i) in sub-section (6), in clause (e),—
(a) in sub-clause (i), after the words "preceding the financial year”,
the words "or during the current financial year” shall be inserted;
(b) in sub-clause (ii),—
(i) in the opening portion, after the words "preceding the
financial year", the words "or during the current financial year"
shall be inserted;
(ii) in item (A), for the words "company secretaries in
practice", the words “secretarial auditors” shall be substituted;
(iii) in item (B), for the words “amounting to ten per cent. or
more", the words “amounting to ten per cent. or such lower
per cent., as may be prescribed” shall be substituted;
(ii) after sub-section (6), the following sub-section shall be inserted,
namely:-
"(6A) Every independent director shall ensure that he continues to
fulfil the requirements specified under sub-section (6) during the term of
his appointment.”;
(iii) in sub-section (11),—
(a) in the proviso, after the word "company", the words "or its
holding, subsidiary or associate company” shall be inserted;
(b) after the proviso, the following proviso shall be inserted,
namely:-
"Provided further that where the provisions of item (B) of
sub-clause (ii) of clause (e) of sub-section (6) apply to an
independent director, he may continue as an employee or
proprietor or partner of the legal or consulting firm, in case the
transaction of such legal or consulting firm with the company, its
holding or subsidiary or associate company is less than ten per
cent. or the lower per cent. referred to in the said item, of the gross
turnover of such firm.";
(c) the Explanation shall be numbered as Explanation 1 thereof
and after Explanation 1 as so numbered, the following Explanation shall
be inserted, namely:-
“Explanation 2.-For the purposes of sub-sections (10) and
(11), any period during which an independent director has served
as an additional director of the company, shall be included in his
tenure as an independent director.".
Amendment of
section 152.
50. In section 152 of the principal Act, in sub-section (3), —
(a) after the words "shall be appointed", the words “or shall continue to
function" shall be inserted;
(b) after the word and figures “section 153", the words "and the said
Director Identification Number or the other number is not deactivated or
cancelled" shall be inserted.
Amendment of
section 154.
51. Section 154 of the principal Act shall be numbered as sub-section (1)
thereof and after sub-section (1) as so numbered, the following sub-sections shall
be inserted, namely:-
"(2) A person who has been allotted Director Identification Number under
sub-section (1) shall submit such information towards verification of his
particulars to the Central Government or an officer authorised by that Government
in this behalf at such intervals and in such manner, as may be prescribed.
(3) Where-
(a) the person referred to in sub-section (2) does not comply with
the provisions of the said sub-section; or
(b) the Director Identification Number has been allotted in
contravention of the provisions of this Act or the rules made thereunder; or
(c) a director has incurred disqualification in one or more
companies pursuant to the provisions of section 164, or where the
Tribunal or any competent court has passed an order in this regard,
the Director Identification Number allotted to him may be deactivated or
cancelled, in such manner as may be prescribed, by the Central Government
or the officer authorised by that Government in this behalf.
(4) Where the Director Identification Number allotted to a director is
deactivated, he shall not function as a director till it gets reactivated.
(5) In case the Director Identification Number allotted to a director is
cancelled, the office of such a director shall become vacant.
(6) A person may surrender the Director Identification Number allotted
to him in such manner as may be prescribed.
(7) Where a Director Identification Number has been deactivated or
cancelled or surrendered under sub-section (3) or sub-section (6), it may be
reactivated or restored on fulfilment of such conditions and on payment of
such fees and in such manner, as may be prescribed.”.
Amendment of
section 159.
52. In section 159 of the principal Act,-
(a) for the words "which may extend to", the word "of" shall be
substituted;
(b) after the words "default continues", the words "subject to a
maximum of five lakh rupees" shall be inserted.
Amendment of
section 161.
53. In section 161 of the principal Act,-
(a) in sub-section (1), for the words “, other than a person who fails to get
appointed as a director in a general meeting, as an additional director at any time
who shall hold office up to the date of the next annual general meeting or the last
date on which the annual general meeting should have been held, whichever is
earlier", the words “as an additional director at any time who shall hold office up
to the date of the next general meeting or up to a period of three months from the
date of his appointment, whichever is earlier” shall be substituted;
(b) in sub-section (4), for the words "filled by the Board of Directors at a
meeting of the Board which shall be subsequently approved by members in the
immediate next general meeting”, the words “appointed by the Board of Directors
at a meeting of the Board and the person so appointed shall hold office up to the
date of the next general meeting or up to a period of three months from the date of
his appointment, whichever is earlier” shall be substituted;
31 of 2016.
(c) after sub-section (4), the following sub-section shall be inserted,
namely:-
"(5) Notwithstanding anything contained in sub-sections (1) to (4),
a person whose appointment as a director could not be considered or
could not be approved in a general meeting, shall not be appointed by
the Board as an additional director, or alternate director or a director
against a casual vacancy under this section without the prior approval of
its members.".
Amendment of
section 164.
54. In section 164 of the principal Act,—
(a) in sub-section (1),—
(i) in clause (g), —
(A) for the words "dealing with related party transactions",
the words "or subjected to penalty for default” shall be substituted;
(B) the word "or" occurring at the end shall be omitted;
(ii) in clause (h), for the word and figures “section 152.", the word
and figures "section 152;” shall be substituted;
(iii) after clause (i), the following shall be inserted, namely:—
"(j) he has been an auditor or a secretarial auditor or a cost
auditor or a registered valuer or an insolvency professional of the
company or its holding, subsidiary or associate company
discharging the functions as such under this Act or under the
Insolvency and Bankruptcy Code, 2016 during the immediately
preceding three financial years or during the current financial year.
Explanation. For the purposes of this clause, where the
audit or secretarial audit or cost audit of a company is conducted,
or valuation services or insolvency professional services are
provided, by a partnership firm or a limited liability partnership,
such partner or partners of the partnership firm or a limited liability
partnership, as the case may be, who conducted the audit or
provided the valuation services or insolvency professional
services, as the case may be, shall not be eligible for appointment
as a director under this sub-section; or
(k) he has not been assessed by the Board to be a fit and
proper person in accordance with such criteria, as may be
prescribed:
Provided that different criteria for fit and proper person may
be prescribed for different class or classes of companies.";
(b) in sub-section (2), —
(i) in clause (a), for the words “three financial years", the words
"two financial years" shall be substituted;
(ii) in the longline, after the words "fails to do so", the words,
brackets and figures "and office of director shall become vacant as per
the provisions of sub-section (1) of section 167” shall be inserted.
Amendment of
section 165.
55. In section 165 of the principal Act, in sub-section (1), —
(a) after the proviso, the following proviso shall be inserted, namely:—
"Provided further that the Central Government may, by
notification, specify a lower number under this sub-section for a class or
classes of companies or a class or classes of directors.";
Amendment of
section 166.
(b) in Explanation II, for the words “of twenty companies", the words
"under this section" shall be substituted.
56. In section 166 of the principal Act,—
(a) in sub-section (7), —
(i) for the words “provisions of this section”, the words, brackets
and figure "provisions of sub-section (5),” shall be substituted;
(ii) after the words “five lakh rupees", the words, brackets and
figure "and the court may also order such director to pay the amount of
undue gains referred to in sub-section (5) to the company" shall be
inserted;
(b) after sub-section (7), the following sub-section shall be inserted,
namely:-
"(8) If a director of the company makes default in complying with
the provisions of this section [except sub-section (5)], he shall, —
(i) in case of a listed company, be liable to a penalty of five
lakh rupees; and
(ii) in case of any other company, be liable to a penalty of
two lakh rupees.".
Amendment of
section 167.
57. In section 167 of the principal Act,-
(a) in sub-section (1), in clause (a), for the proviso, the following shall
be substituted, namely:-
"Provided that where he incurs disqualification under
sub-section (2) of section 164, the office of the director shall become
vacant in every company, where he is a director (including the company
which is in default under that sub-section), after six months from the date
of incurring such disqualification or upon expiry of his tenure in such
company, whichever is earlier.
Explanation. For the purposes of this clause, the date of
incurring the disqualification shall be the date on which the company
fails to comply with the provisions of clause (a) or clause (b) of
sub-section (2) of section 164.”;
(b) in sub-section (2), for the words “he shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to five lakh
rupees", the following shall be substituted, namely:-
"or that his Director Identification Number has been deactivated
or cancelled, he shall, -
(i) in case of listed company, be liable to a penalty of five lakh
rupees; and
(ii) in case of any other company, be liable to a penalty of
two lakh rupees.".
Amendment of
section 173.
58. In section 173 of the principal Act, in sub-section (5), for the words “each
half of a calendar year and the gap between the two meetings is not less than ninety
days", the words "a calendar year" shall be substituted.
Amendment of
section 184.
59. 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.
Amendment of
section 185.
60. 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.
Amendment of
section 186.
61. 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;
(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.".
Amendment of
section 189.
62. 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
section and the rules made thereunder shall be liable to a penalty of two lakh
rupees.".
Insertion of new
section 203A.
Resignation of a
whole-time key
managerial
personnel, who
is not a director.
63. 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 a key managerial personnel under sub-section (1)
shall take effect from the 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.".
Amendment of
section 204.
64. In section 204 of the principal Act,-
(a) in sub-section (1), for the words "company secretary in practice", the
words "secretarial auditor" shall be substituted;
(b) after sub-section (1), the following sub-section shall be inserted,
namely:-
"(1A) 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 a firm, whereof majority of partners practising in
India who are qualified for appointment, may be appointed by its firm
name to be the secretarial auditor of a company:
Provided further 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.";
(c) in sub-sections (2) to (4), for the words “company secretary in
practice", wherever they occur, the words "secretarial auditor" shall be
substituted.
Amendment of
section 206.
65. In section 206 of the principal Act, for sub-section (7), the following
sub-section shall be substituted, namely:-
"(7) If a company fails to furnish any information or explanation or
produce any document required under this section, 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, after the first during which such
failure 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 failure, with a further penalty of
two hundred rupees for each day, after the first during which such failure
continues, subject to a maximum of one lakh rupees.".
Amendment of
section 222.
66. In section 222 of the principal Act,-
(a) in sub-section (1), for the brackets, figure and word “(1) Where", the
word "Where" shall be substituted;
(b) sub-section (2) shall be omitted.
Amendment of
section 230.
31 of 2016.
31 of 2016.
67. In section 230 of the principal Act,-
(a) in sub-section (1), —
(i) the words and figures “or under the Insolvency and Bankruptcy
Code, 2016, as the case may be," shall be omitted;
(ii) before the Explanation, the following provisos shall be
inserted, namely:-
"Provided that on and from the commencement of the
Corporate Laws (Amendment) Act, 2026, every application to be
made under this section or sections 231 to 233 to the Tribunal, shall
be made to the Tribunal having jurisdiction over the transferee
company or the resultant company, as the case may be, and such
Tribunal shall exercise all the powers of the Tribunal referred to in
such sections for all the companies involved in the schemes of
compromise or arrangement or amalgamations:
Provided further that any application pending before the
Tribunal as on the date of commencement of the Corporate Laws
(Amendment) Act, 2026, shall continue to be dealt with by
the Tribunal in accordance with the provisions applicable before
such commencement.";
(b) in sub-section (6), the words and figures “or under the Insolvency
and Bankruptcy Code, 2016, as the case may be" shall be omitted.
Amendment of
section 232.
68. In section 232 of the principal Act, in sub-section (3), in clause (b), in the
proviso, after the words “or extinguished” occurring at the end, the words “on the
merger or amalgamation" shall be inserted.
Amendment of
section 233.
69. In section 233 of the principal Act,-
(a) in sub-section (1), —
(i) for clause (b), the following clause shall be substituted,
namely:-
18 of 2013.
"(b) the objections and suggestions received are considered
by the companies in their respective general meetings and the
scheme is approved by a majority of members or class of members
present and voting at the meeting held in such manner, as may be
prescribed, who hold at least seventy-five per cent. of the value in
shares held by such members present and voting;";
(ii) in clause (d), for the word "nine-tenths", the words "at least
three-fourths" shall be substituted;
(b) in sub-section (2), the following proviso shall be inserted, namely:—
"Provided that the copy of the scheme need not be filed with the
Official Liquidator in case it pertains to transfer or division of the
undertaking of the company.";
(c) in sub-section (13), after the words "of companies", the words “on
such terms and conditions and" shall be inserted.
Insertion of new
section 233A.
Treatment of
certain shares
held in a name
of a company or
trust.
70. After section 233 of the principal Act, the following section shall be
inserted, namely:-
“233A. (1) Where a transferee company, as a result of a compromise or
an arrangement which has taken place prior to the commencement of the
Companies Act, 2013, has held any shares in its own name or in the name of
any trust (whether on its behalf or on behalf of any of its subsidiary or associate
companies), such shares shall, within a period not exceeding three years from
the date of commencement of the Corporate Laws (Amendment) Act, 2026,
be dealt with or disposed of in such manner, as may be prescribed.
(2) Notwithstanding anything contained in this Act, if a company fails
to deal with or dispose of the shares referred to in sub-section (1), such shares
shall be cancelled and extinguished by the company in such manner, as may
be prescribed, and such cancellation and extinguishment shall be deemed to
be a reduction of the share capital of the company.
(3) If the company fails to comply with the provisions of sub-section (2), the
company and every officer of the company who is in default, shall be liable to a
penalty of ten thousand rupees for every day during which the default continues.".
Amendment of
section 242.
71. In section 242 of the principal Act, sub-section (8) shall be omitted.
Amendment of
section 245.
72. In section 245 of the principal Act, in sub-section (1), for the word, brackets
and figure "sub-section (2)", the word, brackets and figure "sub-section (3)" shall be
substituted.
Amendment of
section 247.
73. In section 247 of the principal Act, —
(a) in sub-section (1), for the words "it shall be valued by a person
having such qualifications and experience, registered as a valuer and being a
member of an organisation recognised, in such manner, on such terms and
conditions as may be prescribed and appointed by the audit committee or in
its absence by the Board of Directors of that company", the following shall be
substituted, namely:-
"it shall be valued by a person, who-
(a) has such qualifications and experience as may be
specified by regulations by the Valuation Authority;
(b) is a member of a recognised valuers' organisation; and
(c) holds a valid certificate of registration as a valuer.";
(b) after sub-section (1), the following sub-sections shall be inserted,
namely:-
31 of 2016.
“(1A) The Insolvency and Bankruptcy Board of India established
under section 188 of the Insolvency and Bankruptcy Code, 2016 shall be
the Valuation Authority for the purposes of this section.
(1B) The Valuation Authority shall-
(a) grant or renew certificate of recognition to valuers'
organisations subject to such terms and conditions as may be
specified by regulations by the Valuation Authority;
(b) grant or renew certificate of registration to valuers subject
to such terms and conditions as may be specified by regulations by
the Valuation Authority;
(c) make recommendations to the Central Government on the
formulation and laying down of the valuation standards and
policies;
(d) monitor and enforce the compliance with valuation
standards and policies in such manner, as may be specified by
regulations by the Valuation Authority;
(e) oversee the affairs and quality of service of the recognised
valuers' organisations and registered valuers referred to in
sub-section (1);
(f) perform such other functions relating to clauses (a) to (e),
as may be prescribed.
(1C) A valuation under this Act shall be undertaken only by a
registered valuer who shall be appointed by the audit committee or in its
absence, by the Board of Directors of that company, and in other cases,
by such person, as may be prescribed.";
(c) in sub-section (2),—
(i) for the words, brackets and figure “The valuer appointed under
sub-section (1)", the words, brackets, figure and letter "The registered
valuer appointed under sub-section (1C)" shall be substituted;
(ii) in clause (c), for the words "in accordance with such rules as
may be prescribed", the words “in accordance with such valuation
standards and policies, as may be prescribed and in such manner as may
be specified by the Valuation Authority" shall be substituted;
(d) for sub-section (3), the following sub-sections shall be substituted,
namely:-
"(3) If a recognised valuers' organisation contravenes the
provisions of this section or rules or regulations made thereunder, the
Valuation Authority may suspend or cancel its certificate, for a
minimum period of six months or such higher period not exceeding
ten years, in such manner as may be specified by regulations made
by the Valuation Authority, or impose a penalty of up to one crore
rupees, or both;
(3A) If a registered valuer contravenes the provisions of this
section or the rules or regulations made thereunder, the Valuation
Authority may suspend or cancel the certificate of registration, for a
minimum period of six months or such higher period not exceeding
ten years in such manner as may be specified by regulations made by
the Valuation Authority, or impose a penalty of up to ten lakh rupees,
or both.
(3B) Any person aggrieved by an order of the Valuation Authority
under sub-section (3) or (3A), may prefer an appeal before the Appellate
Tribunal within a period of forty-five days from the date of receipt of
such order by him, in such manner and on payment of such fees, as may
be prescribed.
(3C) A registered valuer, who has contravened the provisions of
this section or rules or regulations made thereunder with the intention to
defraud any person, 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 valuer, whichever is less.
(3D) A recognised valuers' organisation which has contravened
the provisions of this section or the rules or regulations made thereunder
with the intention to defraud any person, shall be punishable with fine
which shall not be less than ten lakh rupees, but which may extend to
one crore rupees and every officer of the organisation who is in default
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.
(3E) Notwithstanding anything to the contrary contained in
section 439, no court shall take cognizance of an offence under
sub-section (3C) or sub-section (3D), which is alleged to have been
committed by any recognised valuers' organisation or any registered
valuer, except on a complaint in writing by an officer authorised in this
behalf by the Valuation Authority or by the Central Government.";
(e) in sub-section (4), in the opening portion, for the words, brackets and
figure "under sub-section (3)", the words, brackets, figure and letter “under
sub-section (3C)" shall be substituted;
(f) after sub-section (4), the following shall be inserted, namely:—
'(5) The Valuation Authority shall make recommendations to the
Central Government on the formulation and laying down of valuation
policies and standards for adoption by companies or class of companies
or such entities or class of entities, as may be prescribed.
(6) After examination of the recommendations of the Valuation
Authority, as may be prescribed, the Central Government may provide
such valuation standards or valuation policies or any addendum thereto.
(7) Without prejudice to the provisions of this Act, the Valuation
Authority shall, in exercise of its powers or the performance of its
functions under this Act, be bound by such directions on questions of
policy, as the Central Government may give in writing to it from time to
time:
Provided that the Valuation Authority shall, except for reasons to
be recorded in writing, be given an opportunity to express its views
before any direction is given under this section:
Provided further that the decision of the Central Government, on
whether a question is one of policy or not, shall be final.
(8) The Valuation Authority may, by a notification, delegate to any
member, officer or any other person, subject to such conditions, if any,
as may be specified in the notification, such of its powers and functions
under this section as it deems necessary.
Amendment of
section 248.
(9) The Valuation Authority may, by notification, make
regulations consistent with this Act and rules made thereunder, for
carrying out its functions under this section and for matters incidental or
connected thereto.
(10) In particular, and without prejudice to the generality of the
foregoing powers, such regulations may provide for all or any of the
following matters, namely:-
(a) qualifications and experience of valuers who may be
registered under sub-section (1);
(b) the terms and conditions under which an organisation
may be recognised under sub-section (1B);
(c) the terms and conditions under which the valuers may be
registered under sub-section (1B);
(d) the manner in which the valuation shall be made by the
valuers under clause (c) of sub-section (2);
(e) inspection and investigation of affairs of the organisations
which are recognised and registered valuers under clause (e) of
sub-section (1B);
(f) manner of suspension or cancellation of certificate of
registration of the valuer or certificate of recognition of the
organisation, as the case may be, and imposition of penalty by the
Valuation Authority under sub-section (3) or (3A);
(g) manner of delegation of powers by the Valuation
Authority to its members or officers under sub-section (8);
(h) for any other matter for carrying out the provisions of this
section.
(11) Every regulation made under this section shall be laid, as soon
as may be after it is made, before each House of Parliament, while it is
in session, for a total period of thirty days which may be comprised in
one session or in two or more successive sessions, and if, before the
expiry of the session immediately following the session or the successive
sessions aforesaid, both Houses agree in making any modification in the
regulation, or both Houses agree that the regulation should not be made,
the regulation shall thereafter have effect only in such modified form or
be of no effect, as the case may be; so, however, that any such
modification or annulment shall be without prejudice to the validity of
anything previously done under that regulation.
Explanation. For the purposes of this section, the expression
"recognised valuers' organisation" means an organisation which has
been recognised under clause (a) of sub-section (1B).'.
74. In section 248 of the principal Act,—
(a) in sub-section (1), —
(i) in clause (c),—
(A) after the words "preceding financial years", the words
"and in the current financial year, or has not made any significant
accounting transaction during the preceding two financial years
and in the current financial year, or has not filed financial
statements or annual returns that were due to be filed for two
consecutive financial years preceding the previous financial year"
shall be inserted;
(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.';
(b) in sub-section (2), —
(i) after the words "extinguishing all its liabilities”, the words “in
such manner as may be prescribed," shall be inserted;
(ii) the words, brackets and figure “on all or any of the grounds
specified in sub-section (1)” shall be omitted;
(c) in sub-section (5),—
(i) after the words “mentioned in the notice", the words, brackets
and figure "published under sub-section (4)" shall be inserted;
(ii) after the words "is shown by the company", the words "or by
any other person" shall be inserted;
(d) in sub-section (6), —
(i) for the words "before passing an order", the words "before
striking off the name of the company" shall be substituted;
(ii) in the proviso, for the words "date of the order removing the
name", the words “date of striking off the name” shall be substituted.
Amendment of
section 249.
75. In section 249 of the principal Act, in sub-section (2), for the words
"punishable with fine which may extend to one lakh rupees", the words "liable to a
penalty of fifty thousand rupees” shall be substituted.
Amendment of
section 252.
76. In section 252 of the principal Act,-
(a) in the marginal heading, for the word “Tribunal", the words
"Regional Director or Tribunal” shall be substituted;
(b) in sub-section (1), —
(i) for the word "Tribunal" wherever it occurs, the words
"Regional Director" shall be substituted;
(ii) 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.
Amendment of
section 271.
77. In section 271 of the principal Act,-
(a) in clause (a), the words “by the Tribunal” shall be omitted;
(b) in clause (c), the words "by notification under this Act" shall be
omitted.
Amendment of
section 361.
78. In section 361 of the principal Act, -
(a) in sub-section (1), —
31 of 2016.
31 of 2016.
(i) for the words “under this Chapter", the words, brackets, letters
and figures "in accordance with the provisions of this Chapter under the
circumstances referred to in clauses (a), (b) and (d) of section 271" shall
be substituted;
(ii) in clause (i), for the word "and", the word "or" shall be
substituted;
(b) for sub-section (2), the following sub-section shall be substituted,
namely:-
"(2) Where an order under sub-section (1) is made, the Central
Government shall-
(a) appoint the Official Liquidator as the liquidator of the
company; or
(b) appoint an insolvency professional registered under the
Insolvency and Bankruptcy Code, 2016, as liquidator of the
company to carry out the functions of Official Liquidator under
this Part.";
(c) in sub-section (5),—
(i) after the words "affairs of the company", the words "by the
Official Liquidator or any officer not below the rank of Assistant
Director as may be authorised by the Central Government in this behalf"
shall be inserted;
(ii) for the words "as may be specified", the words "as it may
direct" shall be substituted;
(d) in sub-section (6), for the words "under the provision", the words
"continued under the provision” shall be substituted;
(e) after sub-section (6), the following Explanation shall be inserted,
namely:-
'Explanation. For the purposes of sections 361 to 365, the term
"Official Liquidator” shall include an insolvency professional registered
under the Insolvency and Bankruptcy Code, 2016 who has been
appointed under sub-section (2).'.
Amendment of
section 365.
79. In section 365 of the principal Act, in sub-section (3), for the word
"notification", the words "notice in the Official Gazette" shall be substituted.
Insertion of new
section 365A.
Appeal under
this Part.
80. After section 365 of the principal Act, the following section shall be
inserted, namely:-
"365A. Any person aggrieved by an order of the Central Government
under this Part, may prefer an appeal within a period of forty-five days from
the date of receipt of such order by him, before the Appellate Tribunal in such
manner and on payment of such fee, as may be prescribed.".
Amendment of
section 366.
81. In section 366 of the principal Act, in sub-section (1), after the words
"co-operative society, society", the words “, any non-trading company" shall
be inserted.
Amendment of
section 374.
82. 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;
(b) after the words "co-operative society, society", the words ", any
non-trading company" shall be inserted.
Amendment of
section 378P.
83. In section 378P of the principal Act,-
(a) sub-section (2) shall be omitted;
Amendment of
section 378Q.
(b) for sub-section (5), the following sub-section shall be substituted,
namely:-
"(5) The directors of the Board shall be elected or appointed by the
Members in the general meetings.".
84. In section 378Q of the principal Act, in sub-section (1), in clause (b), for
the words "ninety days", the words "one hundred and eighty days" shall be
substituted.
Amendment of
section 378Y.
85. In section 378Y of the principal Act, after the words “total membership",
the words "or one hundred members, whichever is less,” shall be inserted.
Amendment of
section 378ZA.
86. 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 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.";
(d) 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.
Amendment of
section 378ZF.
87. For section 378ZF of the principal Act, the following section shall be
substituted, namely:-
“378ZF. (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 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.".
Amendment of
section 378ZM.
88. In section 378ZM of the principal Act,—
(a) in sub-section (1), for the words “punishable with fine which may
extend to ten thousand rupees for every day during which such name has been
used by him", the words “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,
after the first during which such failure continues, subject to a maximum of
five lakh rupees” shall be substituted;
Amendment of
section 378ZS.
(b) in sub-section (2), for the words “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", the words "a penalty of
twenty-five thousand rupees and in case of continuing failure, with a further
penalty of two hundred rupees for each day, after the first during which such
failure continues, subject to a maximum of five lakh rupees" shall be substituted;
(c) for sub-section (3), the following sub-section shall be substituted,
namely:-
"(3) If a director or officer of a Producer Company-
(a) 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
(b) fails to convene annual general meeting or other general
meetings,
he 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, after the first during which such failure continues, subject to a
maximum of one lakh rupees.".
89. In section 378ZS of the principal Act, for sub-section (6), the following
sub-section shall be substituted, namely:-
"(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 liable to a penalty
of one hundred rupees, for each copy in respect of which default is made.".
Amendment of
section 392.
90. In section 392 of the principal Act, for the portion beginning with "shall
be punishable with fine" and ending with “may extend to five lakh rupees", the
words "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 contravention, with a
further penalty of two hundred rupees for each day, after the first during which such
failure continues, subject to a maximum of two lakh rupees" shall be substituted.
Amendment of
section 396.
91. In section 396 of the principal Act,—
(a) in the marginal heading, for the word “offices", the words "and other
offices" shall be substituted;
(b) after sub-section (1), the following sub-section shall be inserted,
namely:-
"(1A) The Central Government may appoint such number of Regional
Directors, Additional Regional Directors or Joint Regional Directors or
Deputy Regional Directors as it considers necessary for discharge of various
functions under this Act, and the powers and duties that may be exercisable
by such officers shall be such as may be prescribed.";
(c) in sub-section (2), after the words “Assistant Registrars”, the words
"or such other officers" shall be inserted;
(d) after sub-section (2), the following sub-section shall be inserted,
namely:-
"(2A) The Central Government may authorise one or more officers
not below the rank of Assistant Director or Assistant Registrar of that
Government to exercise such powers and duties of the Regional Director
or the Registrar and to discharge such functions under this Act as it may
specify, by notification.”.
Insertion of new
section 396A.
Grievance
mechanism
against decision
of Registrar
under section 7.
92. After section 396 of the principal Act, the following section shall be
inserted, namely:—
"396A. Any person aggrieved by the decision of the Registrar under
section 4 or section 7, may prefer an appeal to an officer not below the rank
of the Joint Director as may be authorised by the Central Government, in such
form and manner, and within such period as may be prescribed.".
Amendment of
section 403.
93. In section 403 of the principal Act, in sub-section (1),—
(a) 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;
(b) 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 companies, as may
be prescribed:
Provided also".
Amendment of
section 410.
94. 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.
Amendment of
section 418A.
31 of 2016.
95. 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.".
Amendment of
section 419.
96. In section 419 of the principal Act,-
(a) in sub-section (4), for the words and figures “Part II of”, the words
"any of the provisions of" shall be substituted;
(b) after sub-section (4), the following sub-section shall be inserted,
namely:-
"(4A) The President may, if he considers appropriate, constitute, in
such manner as may be prescribed, one or more Special Benches of the
Tribunal to exercise the powers of the Tribunal for the disposal of any
case or cases under this Act, or under the Insolvency and Bankruptcy
Code, 2016.".
Amendment of
section 441.
97. In section 441 of the principal Act, in sub-section (1), in clause (b), for the
words "does not exceed twenty-five lakh rupees", the words “does not exceed one
crore rupees" shall be substituted.
Amendment of
section 446B.
98. In section 446B of the principal Act, for the words "liable to a penalty
which shall not be more than one-half of the penalty", the words “liable to a penalty
of one-half, or such per cent. not exceeding one-half, as may be prescribed, of the
penalty" shall be substituted.
Amendment of
section 447.
99. In section 447 of the principal Act,—
(a) for the words “ten lakh rupees", the words “twenty-five lakh rupees"
shall be substituted;
(b) in the second proviso, for the words "fifty lakh rupees", the words
“one crore rupees" shall be substituted.
Amendment of
section 453.
100. In section 453 of the principal Act, for the words “punishable with fine
which shall not be less than five hundred rupees but may extend to two thousand
rupees for every day", the words "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, after the first during which such failure continues, subject to a maximum of
five lakh rupees" shall be substituted.
Amendment of
section 454.
101. In section 454 of the principal Act,-
(a) in sub-section (1), for the word “Registrar,” the words “Assistant
Registrar" shall be substituted;
(b) after sub-section (1), the following sub-section shall be inserted,
namely:-
"(1A) A company or its officer who is in default, may make an
application in such form and manner and on payment of such fees, as
may be prescribed under this section for adjudication of penalty.";
(c) in sub-section (5),—
(i) after the words “Regional Director having jurisdiction in the
matter", the words "or to such Appellate Authority, as the Central
Government may, by notification, specify” shall be inserted;
(ii) the following proviso shall be inserted, namely:-
"Provided that the Appellate Authority shall not be below the
rank of Joint Director.";
(d) in sub-section (7), after the words “Regional Director”, the words,
brackets and figure "or the Appellate Authority referred to in sub-section (5)”
shall be inserted;
(e) in sub-section (8), —
(i) in clause (i), after the words "five lakh rupees", the words "by
a Court and the said Court shall also have the power to direct such
company to pay the amount of penalty imposed by the said order" shall
be inserted;
(ii) in clause (ii), after the words "or with both", the words "by a
Court and the said Court shall also have the power to direct such officer
or the other person to pay the amount of penalty imposed by the said
order" shall be inserted;
(f) after sub-section (8), the following sub-sections shall be inserted,
namely:-
"(9) The penalties realised under this section shall be credited to
the Consolidated Fund of India.
43 of 1961.
(10) On and from the commencement of the Corporate Laws
(Amendment) Act, 2026, where a provision in respect of any offence
provided in this Act has been amended to provide for adjudication under
this section,
(a) the manner of withdrawal of the complaint; and
(b) the manner of transfer of such matter for adjudication
under this section,
in respect of such offence, whether pending in the Court or otherwise,
shall be dealt with in accordance with such Scheme as the Central
Government may notify in this behalf.".
Amendment of
section 454A.
Insertion of new
sections 454B,
454C and 454D.
Recovery of
amounts.
102. In section 454A of the principal Act, after the words "Regional Director",
the words, brackets and figures "or the Appellate Authority referred to in
sub-section (5) of section 454" shall be inserted.
103. After section 454A of the principal Act, the following sections shall be
inserted, namely:—
'454B. (1) If a person fails to pay the penalty imposed under this Act,
the Recovery Officer may draw up under his signature a statement (herein
referred to as certificate) in the specified form specifying the amount due from
the person and shall proceed to recover from such person the amount specified
in the certificate by one or more of the following modes, namely:-
(a) attachment and sale of movable property of such person;
(b) attachment of bank accounts of such person;
(c) attachment and sale of immovable properties of such person;
(d) arrest of that person and his detention in prison;
(e) appointing a receiver for the management of such movable or
immovable properties,
and for this purpose, the provisions of sections 220 to 227, 228A, 229, 232,
the Second Schedule and Third Schedule to the Income-tax Act, 1961 and the
Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to
time, in so far as may be, apply with necessary modifications as if the
corresponding provisions of the said Act and the rules made thereunder were
the provisions of this Act and referred to the amount due under this Act,
instead of to income-tax under the Income-tax Act, 1961.
Explanation 1. For the purposes of this sub-section, the movable or
immovable property or monies held in bank accounts of the person, shall
include any property or monies held in bank accounts which has been
transferred directly or indirectly on or after the date when the amount specified
in the certificate had become due, by the person to his spouse or his minor
child or son's wife or son's minor child, otherwise than for adequate
consideration, and which is held by, or stands in the name of, any of his
relations aforementioned; and so far as the movable or immovable property or
monies held in bank accounts so transferred to his minor child or his son's
minor child is concerned, it shall, even after the date of attainment of majority
by such minor child or son's minor child, as the case may be, continue to be
included in the movable or immovable property or monies held in bank
accounts of such person for recovering any amount due from him under
this Act.
Settlement.
Deposit of
certain amount
before appeal is
entertained.
43 of 1961.
43 of 1961.
43 of 1961.
Explanation 2. Any reference under the provisions of the Second
Schedule or the Third Schedule to the Income-tax Act, 1961 and the
Income-tax (Certificate Proceedings) Rules, 1962 to the assessee, shall be
construed as a reference to the person specified in the certificate.
Explanation 3. Any reference to an appeal under Chapter XVIID and
the Second Schedule to the Income-tax Act, 1961, shall be construed as a
reference to an appeal before the Appellate Authority under sub-section (5)
of section 454 of this Act.
Explanation 4. The interest referred to in section 220 of the
Income-tax Act, 1961 shall commence from the date the amount became
payable by the person.
(2) The Recovery Officer shall have power to seek the assistance of the
local district administration while exercising the powers under sub-section (1).
Explanation. For the purposes of this section, the expression
"Recovery Officer” means an officer not below the rank of Assistant Registrar
or Assistant Director authorised by the Central Government in this behalf, by
general or special order in writing, to exercise the powers of a Recovery
Officer.
454C. (1) The contraventions which shall be liable for penalty under this
Act may, subject to the provisions of this section, eligible for settlement.
(2) The Central Government may constitute a Specified Authority
comprising of an officer or group of officers of the Central Government which
may discharge the functions of Specified Authority under this section.
(3) Any person, against whom any proceeding has been initiated for
contravention of any provision referred to in sub-section (1), may file an
application in writing to the Specified Authority in such form and manner, as
may be prescribed.
(4) An application under sub-section (3) may be submitted at any time
before the order of penalty is passed.
(5) The Specified Authority may, after taking into consideration the
nature, gravity and impact of contraventions, agree to the proposal for
settlement, on payment of such sum by the applicant or on such other terms
and manner of implementation of settlement and monitoring, as may be
prescribed.
(6) If the Specified Authority is of the opinion that the settlement offered
is not appropriate in the circumstances, or if the Specified Authority and
applicant concerned do not reach an agreement on the terms of the settlement
within such time as may be prescribed, it shall by an order reject the
application for settlement and the proceedings initiated against the applicant
shall be continued.
(7) The settlement proceedings under this section shall be conducted in
such manner as may be prescribed.
(8) No appeal shall lie against an order passed by the Specified
Authority under this section.
(9) All settlement amounts realised under this Act shall be credited to
the Consolidated Fund of India.
454D. No appeal by a person, who is required to pay any amount in terms
of an order of
(a) the National Financial Reporting Authority under section 132; or
(b) the Valuation Authority under section 247; or
Amendment of
section 455.
(c) the adjudicating officer under section 454,
shall be entertained by the Appellate Tribunal or Regional Director or the
Appellate Authority referred to in sub-section (5) of section 454, as the case
may be, unless the appellant has deposited ten per cent. of that amount in the
manner as directed by the Appellate Tribunal or Regional Director or the
Appellate Authority, as the case may be.”.
104. In section 455 of the principal Act,-
(a) in sub-section (1), for the words “or an inactive company may", the
words "or an inactive company shall” shall be substituted;
(b) in the Explanation below sub-section (1),—
(i) in clause (i)
(A) for the words "financial statements and", the words
"financial statements or" shall be substituted;
(B) for the word "last" occurring at both the places, the word
"preceding" shall be substituted;
(ii) in clause (ii),—
(A) in sub-clause (c), the word "and" shall be omitted;
(B) in sub-clause (d), for the word "record.", the words
"record; and" shall be substituted;
(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.".
Amendment of
section 457.
105. In section 457 of the principal Act, in clause (a), after the word and
figures "section 210", the words and figures “or section 212" shall be inserted.
Insertion of new
section 466A.
Central
Government to
issue directions,
guidelines or
circulars.
106. After section 466 of the principal Act, the following section shall be
inserted, namely:-
"466A. The Central Government may issue directions or guidelines or
circulars, subject to such conditions, as may be necessary, for the following
purposes, namely:-
(a) clarifying the meaning or intent of any rule; and
(b) laying down any procedural requirement ancillary to any rule:
Provided that the Central Government shall hold consultation with
expert bodies or individuals in such manner, as may be prescribed, before
issuing directions or guidelines or circulars, under this section:
Provided further that where the Central Government is of the opinion
that it is necessary or expedient in the public interest that certain directions or
guidelines or circulars are required to be made urgently for the purposes of
effective implementation of the concerned rule, it may issue such directions
or guidelines or circulars, without consulting the expert bodies or individuals
and record the reasons for doing so in writing.
Explanation. The directions or guidelines or circulars issued under this
section shall be in addition to and not in derogation of any rule made under
section 469 and in case of any conflict, the rule shall prevail.".
Amendment of
section 469.
107. In section 469 of the principal Act, for sub-section (3), the following
sub-section shall be substituted, namely:-
"(3) Any rule made under sub-section (1) may provide that in case of
contravention thereof, the company, every officer of the company who is in
default or any other person, shall be liable to a penalty of an amount, as may
be prescribed, which shall not be more than five lakh rupees, and in case of
continuing default, with a further penalty of such amount, as may be
prescribed, which shall not be more than five thousand rupees for every day
during which such default continues.".
STATEMENT OF OBJECTS AND REASONS
The Companies Act, 2013 (the Companies Act) was enacted to consolidate
and amend the laws relating to companies. The said Act introduced significant
changes related to disclosures to stakeholders, accountability of directors, auditors
and key managerial personnel, investor protection and corporate governance. The
said Act was earlier amended in 2015, 2017, 2019 and 2020 to decriminalise certain
offences, facilitate ease of doing business, rationalise compliance requirements and
recognise new concepts.
2. The Limited Liability Partnership Act, 2008 (the LLP Act) was enacted to
make provisions for the formation and regulation of limited liability partnerships
and for matters connected therewith or incidental thereto. It aims to facilitate doing
business in the form of an LLP which has the flexibility of a partnership firm but is
constituted in the form of a body corporate structure with limited liability and
perpetual succession. The LLP Act was amended in the year 2021 to facilitate ease
of doing business and to decriminalise certain offences.
3. In continuation of the Government's constant endeavour to facilitate greater
ease of doing business for corporates, the Company Law Committee (CLC)
constituted by the Government submitted its last report in March, 2022. On the basis
of the said report, consultations made with various stakeholders and the
recommendations of the High Level Committee on Non-Financial Regulatory
Reforms [HLC-NFRR], it is proposed to amend the Companies Act and the
LLP Act. The proposed amendments are broadly aimed at-
(i) promoting further ease of doing business and ease of living for corporates
by decriminalising more provisions and amending certain other provisions;
(ii) providing ease of compliance for One Person Companies, small
companies, start-up companies and producer companies;
(iii) streamlining existing regulatory practices to strengthen and improve
the operational efficiency of the said enactments;
(iv) recognising new concepts in light of rapidly evolving corporate
landscape and changing business practices; and
(v) carrying out drafting and clarificatory changes to remove
ambiguities.
4. Accordingly, it is proposed to introduce the Corporate Laws (Amendment)
Bill, 2026, which, inter alia, provides for-
(a) decriminalisation of various procedural defaults under the
Companies Act and the LLP Act by replacing criminal provisions with civil
penalties;
(b) simplification of procedures relating to mergers and amalgamations
through rationalisation of approval thresholds for fast-track mergers and
enabling filing of applications before a single bench of the National Company
Law Tribunal having jurisdiction over the transferee company;
(c) providing further relaxations for small companies by providing
exemption from mandatory Corporate Social Responsibility (CSR),
requirements related to auditor appointment for prescribed class of small
companies, reduction in additional fees, etc.;
(d) simplification of procedures relating to voluntary strike-off of
companies to facilitate quicker and simpler closure or voluntary exit for
companies;
(e) relaxations in CSR requirements through revision of eligibility
thresholds and enhancing timelines for transfer of unspent amounts to a
separate bank account relating to ongoing project and revising eligibility
threshold with regard to constitution of CSR committees;
(f) facilitating companies and limited liability partnerships operating in
International Financial Services Centres by allowing them to issue and
maintain share capital in foreign currency as permitted by the International
Financial Services Centres Authority;
(g) enabling companies to hold Annual General Meetings and
Extraordinary General Meetings through video conferencing or other audio
visual means with requirement for holding at least one Annual General
Meeting in physical mode within a specified period;
(h) replacement of certain affidavits required under the Act with
self-declarations;
(i) enabling multi-disciplinary partnerships for cost auditors and
secretarial auditors in a similar manner as provided for financial auditors;
(j) enhancing monetary thresholds of fines for compounding of offences
by Regional Directors so as to reduce the burden on the National Company
Law Tribunal;
(k) making third party professional certification at the time of
incorporation optional;
(1) flexibility in buy-back of shares for prescribed classes of companies;
(m) rationalisation of provisions relating to producer companies;
(n) easing compliances for Alternative Investment Funds which are
formed as limited liability partnerships;
(0) strengthening the role of the National Financial Reporting Authority;
(p) enabling constitution of special benches of the National Company
Law Tribunal to hear specific matters under the Companies Act and the
Insolvency and Bankruptcy Code, 2016;
(q) enabling conversion of specified non-trading entities registered with
State Governments into section 8 companies;
(r) clarification that compromise or arrangement under the Companies
Act shall not be allowed, where process of liquidation has commenced under
the Insolvency and Bankruptcy Code, 2016;
(s) recognising new forms of instruments linked to the value of share
capital for executive compensation;
(t) clarification that a trust shall be registered as a beneficial owner and
trustee shall be registered as a member in the register of members of a
company; and
(u) further consequential amendments relating thereto.
5. The notes on clauses explain, in detail, the provisions of the Bill.
6. The Bill seeks to achieve the above objectives.
NEW DELHI;
The 18th March, 2026.
NIRMALA SITHARAMAN.
MEMORANDUM REGARDING DELEGATED LEGISLATION
Clause 3 of the Bill empowers the Central Government to make rules under
clauses (c) and (d) of sub-section (1) of section 11 of the Limited Liability Partnership
Act, 2008, in respect of the form of the statement to be filed along with the incorporation
document, by any one person who subscribed his name to the incorporation document
and the form of declaration to be filed by an advocate, a chartered accountant, cost
accountant or company secretary in practice, where a limited liability partnership
engaged such professionals in its formation or incorporation.
Clause 6 of the Bill empowers the Central Government to make rules under the
proviso to sub-section (2) of section 23 of the Limited Liability Partnership Act, 2008,
in respect of the class or classes of limited liability partnerships regulated by the
Securities and Exchange Board of India (SEBI), or by the International Financial
Services Centres Authority (IFSCA), and the requirement of filing changes in the
limited liability partnership agreement to the Registrar, by such limited liability
partnerships.
Clause 7 of the Bill empowers the Central Government to make rules under the
proviso to sub-section (2) of section 25 of the Limited Liability Partnership Act, 2008,
in respect of the class or classes of limited liability partnerships regulated by the SEBI,
or the IFSCA, and the form and manner of furnishing the details of changes in partners
to the Registrar on an annual basis, by such limited liability partnerships.
Clause 12 of the Bill empowers the Central Government to make rules under
the explanation to section 57A of the Limited Liability Partnership Act, 2008, in
respect of the activities that may be carried out by a "specified trust” established
under the Indian Trusts Act, 1882 or under a Central Act or State Act, and registered
by the SEBI, or by the IFSCA, as the case may be.
Clause 13 of the Bill empowers the Central Government to make rules under the
proviso to sub-section (1) of section 58 of the Limited Liability Partnership Act, 2008,
in respect of information about conversion and the form and manner of the conversion
and of the particulars of the limited liability partnership that are required to be
intimated to the concerned Registrar of Firms or Registrar of Companies or any other
authority, as the case may be, with which it was registered or established under the
provisions of the Indian Partnership Act, 1932 or the Companies Act, 2013, or any
other law for the time being in force, as the case may be.
Clause 14 of the Bill empowers the Central Government to make rules under
the proviso to sub-section (1) of section 68 of the Limited Liability Partnership
Act, 2008, in respect of the manner in which a Specified International Financial
Services Centres LLP shall use permitted foreign currency, for the purpose of filing,
recording, or registering any document under the said section.
Clause 15 of the Bill empowers the Central Government to make rules under
section 68B of the Limited Liability Partnership Act, 2008, in respect of the form and
manner, and period within which any person aggrieved by the decision of the Registrar
under section 12 or section 16 of the Limited Liability Partnership Act, 2008 may
prefer an appeal and to prescribe the officer of the Central Government to whom the
appeal may be preferred.
Clause 16 of the Bill empowers the Central Government to make rules under
sub-section (1A) of section 76A of the Limited Liability Partnership Act, 2008, in
respect of the form and manner of making an application, and the fees payable by a
limited liability partnership or its partner or designated partner for adjudication of
penalties under section 76A. It also empowers the Central Government to notify a
scheme to deal with the manner of withdrawal of the complaint and transfer of any
matter thereto for adjudication under section 76A if such complaint or matter relates
to those offences in respect of which, on and from the commencement of the
Corporate Laws (Amendment) Act, 2026, the provision has been amended to
provide for adjudication under section 76A.
Clause 17 of the Bill empowers the Central Government to make rules under
paragraph 4(a) of the Fifth Schedule of the Limited Liability Partnership Act, 2008,
in respect of the form and manner, and such fee for the statement by all of its trustees,
containing the particulars as given under paragraph 4(a).
It further empowers the Central Government to make rules under paragraph 5
of the Fifth Schedule, in respect of the form and manner in which the limited liability
partnership shall inform the concerned authority about the conversion and of the
particulars of the limited liability partnership.
Clause 18 of the Bill empowers the Central Government to make rules under
clause (41) of section 2 of the Companies Act, 2013, in respect of the form and
manner of an application made to the Central Government by a company or body
corporate referred to in the first proviso to clause (41) of section (2) or, on
commercial considerations, by any other company or body corporate, to realign its
financial year as the period ending on the 31st day of March of the following year.
Clause 20 of the Bill empowers the Central Government to make rules under
clauses (b) and (ba) of sub-section (1) of section 7 of the Companies Act, 2013, in
respect of the form of the declaration by a person named in the articles as a director,
manager or secretary of the company, and the form of a declaration by an advocate,
a chartered accountant, cost accountant or company secretary in practice, where a
company engaged such professionals in its formation or incorporation.
Clause 21 of the Bill empowers the Central Government to make rules under
sub-section (1) of section 12A of the Companies Act, 2013, in respect of the class or
classes of companies which shall maintain a website, an e-mail address and other
modes of communication, and the form and manner for maintaining the same. It
further seeks to empower the Central Government, under sub-section (2) of
section 12A, to make rules, in respect of the form and period within which the details
of such website, e-mail address and other modes of communication and any changes
therein, shall be intimated to the Registrar.
Clause 22 of the Bill empowers the Central Government to make rules under
the proviso to sub-section (2) of section 20 of the Companies Act, 2013, in respect
of the class or classes of companies, the class of documents which may be serviced,
and the manner of service of such documents by such companies.
Clause 27 of the Bill empowers the Central Government to make rules under
sub-section (3) of section 43A of the Companies Act, 2013, in respect of the manner
in which the Central Government may require that a company referred to in
sub-section (1) of the said section shall use permitted foreign currency for the purpose
of filing, submitting or delivering any documents under section 398 of the
Companies Act, 2013.
Clause 29 of the Bill empowers the Central Government to make rules under
the proviso to clause (c) of sub-section (2) of section 68 of the Companies Act, 2013,
in respect of the class or classes of companies, and the percentage of the aggregate
of paid-up capital and free reserves, up to which a buy-back may be made by such
prescribed class or classes of companies. Further, it empowers the Central
Government to make rules under the proviso to clause (g) of said sub-section (2) in
respect of the class or classes of companies which may make up to two offers of
buy-backs within a period of one year.
Clause 30 of the Bill empowers the Central Government to make rules under
the proviso to sub-section (1) of section 77 of the Companies Act, 2013, in respect
of the class or classes of companies for which the period of "sixty days" in
clause (b) of the second proviso shall be read as "one hundred and twenty days".
Clause 32 of the Bill empowers the Central Government to make rules under
sub-section (3) of section 96 of the Companies Act, 2013, in respect of the manner,
terms and conditions for a company to hold its annual general meeting through video
conferencing or other audio-visual means, either wholly or partly.
Clause 34 of the Bill empowers the Central Government to make rules under
sub-section (7) of section 100 of the Companies Act, 2013, in respect of the manner,
terms and conditions for a company to hold its extraordinary general meeting
through video conferencing or other audio-visual means, either wholly or partly.
Clause 35 of the Bill empowers the Central Government to make rules under
sub-section (1) of section 101 of the Companies Act, 2013, in respect of the period
for notice and the manner of issuing notice by a company conducting its
extraordinary general meeting wholly through video conferencing or audio-visual
means under sub-section (7) of section 100.
Clause 37 of the Bill empowers the Central Government to make rules under
sub-section (4) of section 125 of the Companies Act, 2013, in respect of the
procedure for application and the documents which are required to be submitted by
any person claiming to be entitled to the amount referred to in sub-section (2). It
also empowers the Investor Education and Protection Fund Authority under
sub-section (12) of section 125 to delegate, by way of notification, to any member,
officer or any other person subject to such conditions, if any, in such notification,
any of its powers and functions under this Act as it deems necessary.
Clause 40 of the Bill empowers the Central Government to make rules under
clause (a) of sub-section (4) of section 132 of the Companies Act, 2013, in respect
of the class of body corporate or persons in respect of whom action may be taken
under the said clause.
Clause 41 of the Bill empowers the Central Government to make rules under
sub-section (1) of proposed section 132A of the Companies Act, 2013, in respect of
the time, manner and fees for an individual or firm to intimate the details of his or
its registration with the Institute of Chartered Accountants of India, to the National
Financial Reporting Authority.
Clause 42 of the Bill empowers the Central Government to make rules under
clause (fa) of sub-section (3) of section 134 of the Companies Act, 2013, in respect
of the form of the explanations or comments by the Board to be included within the
report of the Board of Directors, on every observation or comment of the auditors
on financial transactions or matters which have any adverse effect on the functioning
of the company under clause (f) of sub-section (3) of section 143 and any
qualification, reservation or adverse remark relating to the maintenance of accounts
and other matters connected therewith under clause (h) of sub-section (3) of
section 143.
Clause 43 of the Bill empowers the Central Government to make rules under
sub-section (1) of section 135 of the Companies Act, 2013, in respect of the amount
of net profit for constitution of the Corporate Social Responsibility (CSR)
Committee. It also empowers the Central Government to make rules under
sub-section (9), in respect of higher amount which would need to be spent in
pursuant of CSR Policy for the purpose of requirement of constitution of CSR
Committee. It also empowers the Central Government under sub-section (10) to
make rules in respect of the class or classes of companies and the conditions which
must be fulfilled by such companies, which shall not be required to comply with the
provisions of section 135.
Clause 44 of the Bill empowers the Central Government to make rules under
sub-section (12) of section 139 of the Companies Act, 2013, in respect of the class or
classes of companies, and the conditions which must be fulfilled by such companies,
which shall not be required to appoint auditors under Chapter X of the Companies
Act, 2013.
Clause 46 of the Bill empowers the Central Government to make rules under
the proviso to section 144 of the Companies Act, 2013, in respect of the class or
classes of companies, of which the auditor or audit firm, shall not provide, directly
or indirectly, any non-audit services to the company or its holding or subsidiary.
Clause 48 of the Bill empowers the Central Government to make rules under
sub-section (1A) of section 148 of the Companies Act, 2013, in respect of the
standards of cost accounting or any addendum thereto, after examination of
recommendations of the Institute of Cost Accountants of India, constituted under
the Cost Accountants Act, 1959.
Clause 49 of the Bill empowers the Central Government to make rules under
item (B) of sub-clause (ii) of clause (e) of sub-section (6) of section 149 of the
Companies Act, 2013, in respect of such lower per cent. of the gross turnover of a
legal or consulting firm having transactions with the company, its holding,
subsidiary or associate company.
Clause 51 of the Bill empowers the Central Government to make rules under
sub-section (2) of section 154 of the Companies Act, 2013, in respect of the intervals
and manner in which a person who has been allotted a Director Identification
Number shall submit such information towards verification of his particulars to the
Central Government or an officer authorised by that Government in this behalf. It
further empowers the Central Government to make rules, under sub-section (3) of
section 154, in respect of the manner in which the Director Identification Number
allotted to a person may be deactivated or cancelled by the Central Government or
the officer authorised by that Government in this behalf. It also empowers the
Central Government to make rules under sub-section (6) of section 154, in respect
of the manner in which a person may surrender the Director Identification Number
allotted to him. It also empowers the Central Government to make rules under
sub-section (7) of section 154, in respect of the conditions, fees, and manner for
reactivation or restoration of a Director Identification Number that has been
deactivated or cancelled or surrendered under sub-section (3) or (6) of section 154.
Clause 54 of the Bill empowers the Central Government to make rules under
clause (k) of sub-section (1) of section 164 of the Companies Act, 2013, in respect
of the criteria for assessment by the Board in respect of a person being a fit and
proper person, and to prescribe different criteria for fit and proper person for
different class or classes of companies.
Clause 63 of the Bill empowers the Central Government to make rules under
sub-section (1) of section 203A of the Companies Act, 2013, in respect of the form and
manner and the time within which the Board shall intimate the Registrar of the
resignation of a whole-time key managerial personnel who is not a director. It further
empowers the Central Government to make rules under the proviso to sub-section (1)
of section 203A, in respect of the manner in which the said key managerial personnel
may forward a copy of his resignation along with detailed reasons for his resignation to
the Registrar.
Clause 69 of the Bill empowers the Central Government to make rules under
clause (b) of sub-section (1) of section 233 of the Companies Act, 2013, in respect
of the manner in which the meeting of members or class of members present and
voting shall be held for approval of the scheme.
Clause 70 of the Bill empowers the Central Government to make rules under
sub-section (1) of section 233A of the Companies Act, 2013, in respect of the
manner in which shares held by a transferee company in its own name or in the
name of any trust (whether on its behalf or on behalf of any of its subsidiary or
associate companies) shall be dealt with or disposed of. It further empowers the
Central Government to make rules under sub-section (2) of section 233A, in respect
of the manner in which shares shall be cancelled and extinguished by the company
where it fails to deal with or dispose of the shares referred to in sub-section (1) of
section 233A.
Clause 73 of the Bill empowers the Central Government to make rules under
clause (f) of sub-section (1B) of section 247, such other functions relating to
clauses (a) to (e) of sub-section (1B) which may be performed by the Valuation
Authority. It also empowers the Central Government to make rules under
sub-section (1C), the person who may appoint a registered valuer, in cases other
than appointment by the audit committee or by the Board of Directors of that
company. It also empowers the Central Government to make rules under clause (c)
of sub-section (2), in respect of the valuation standards and policies.
It also empowers the Central Government to make rules under
sub-section (3B) of section 247, the manner in which, and the fees on payment of
which any person aggrieved by an order of the Valuation Authority, under
sub-section (3) or (3A) of section 247 may prefer an appeal before the Appellate
Tribunal. It further empowers the Central Government to make rules under
sub-section (5), companies or class of companies or such entities or class of entities
who shall adopt valuation policies and standards formulated and laid down by the
Central Government. It also empowers the Central Government to make rules under
sub-section (6), the valuation standards or valuation policies or any addendum
thereto, after examination of the recommendations of the Valuation Authority.
Clause 74 of the Bill empowers the Central Government to make rules under
sub-section (2) of section 248 of the Companies Act, 2013, in respect of the manner
in which a company may extinguish all its liabilities before filing an application to
the Registrar for removing the name of the company from the register of companies.
Clause 80 of the Bill empowers the Central Government to make rules under
section 365A of the Companies Act, 2013, in respect of the manner in which, and
the fee on payment of which any person aggrieved by an order of the Central
Government under Part IV of Chapter XX of the Companies Act, 2013, may prefer
an appeal within a period of forty-five days from the date of receipt of such order
by him.
Clause 82 of the Bill empowers the Central Government to make rules under
clause (c) of section 374 of the Companies Act, 2013, in respect of the form of the
declaration to be filed by all the members or partners in the event of registration
under Part I of Chapter XXI of the Companies Act, 2013.
Clause 87 of the Bill empowers the Central Government to make rules under
sub-section (1) of section 378ZF of the Companies Act, 2013, in respect of such
other amount of average annual turnover in each of the three consecutive financial
years for requiring a Producer Company to appoint an internal auditor. It further
empowers the Central Government to make rules under sub-section (2) of
section 378ZF, in respect of the manner and the intervals in which the internal audit
shall be conducted and reported to the Board.
Clause 91 of the Bill empowers the Central Government to make rules under
sub-section (1A) of section 396 of the Companies Act, 2013, in respect of the powers
and duties that may be exercisable by the Regional Directors, Additional Regional
Directors or Joint Regional Directors or Deputy Regional Directors, appointed by the
Central Government for discharge of various functions under the Companies
Act, 2013.
Clause 92 of the Bill empowers the Central Government to make rules under
section 396A of the Companies Act, 2013, in respect of the form and manner in
which and the period within which any person aggrieved by the decision of the
Registrar under section 4 or section 7 of the Companies Act, 2013, may prefer an
appeal to an officer not below the rank of the Joint Director, as may be authorised
by the Central Government.
Clause 93 of the Bill empowers the Central Government to make rules under
the first proviso to sub-section (1) of section 403 of the Companies Act, 2013, in
respect of the amount per day payable for submitting, filing, registering or recording
any document, fact or information after expiry of the period provided under
sections 92 or 137. It further empowers the Central Government to make rules,
under the second proviso to sub-section (1) of section 403, in respect of such class
and classes of companies, for which the amount of additional fees shall not exceed
two lakh rupees.
Clause 96 of the Bill empowers the Central Government to make rules through
sub-section (4A) of section 419 of the Companies Act, 2013, in respect of the
manner in which the President may constitute one or more Special Benches of the
Tribunal to exercise the powers of the Tribunal for the disposal of cases under the
Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.
Clause 98 of the Bill empowers the Central Government to make rules through
section 446B of the Companies Act, 2013, in respect of such per cent., not exceeding
one-half, of the penalty specified in such provisions payable for non-compliance by
a One Person Company, small company, start-up company, or Producer Company,
or any of its officer in default, or any other person in respect of such company.
Clause 101 of the Bill empowers the Central Government to make rules under
sub-section (1A) of section 454 of the Companies Act, 2013, in respect of the form
and manner and such fees payable for making an application for adjudication of
penalty under that section, by a company or its officer who is in default. It also
empowers the Central Government to notify a scheme to deal with the manner of
withdrawal of the complaint and transfer of any matter thereto for adjudication
under that section if such complaint or matter relates to those offences in respect of
which, on and from the commencement of the Corporate Laws (Amendment)
Act, 2026, the provision has been amended to provide for adjudication under that
section.
Clause 103 of the Bill empowers the Central Government to make rules under
sub-section (3) of section 454C of the Companies Act, 2013, in respect of the form
and manner of filing an application in writing to the Specified Authority by any
person, against whom any proceeding has been initiated for contravention of any
provision referred to in sub-section (1) of section 454C. It further empowers the
Central Government to make rules under sub-section (5) of section 454C of the
Companies Act, 2013, in respect of the terms and manner of implementation of
settlement and monitoring, and the sum on payment of which the Specified
Authority may agree to the proposal of settlement.
It also empowers the Central Government to make rules under sub-section (6)
of section 454C of the Companies Act, 2013, in respect of the time within which the
Specified Authority and applicant concerned do not reach an agreement on the terms
of settlement, before it rejects the application for settlement the proceedings initiated
against the applicant are continued.
It also empowers the Central Government to make rules under sub-section (7)
of section 454C of the Companies Act, 2013, in respect of the manner in which the
settlement proceedings under section 454C shall be conducted.
Clause 106 of the Bill empowers the Central Government to make rules under
the proviso to section 466A of the Companies Act, 2013, in respect of the manner
in which the Central Government shall hold consultation with expert bodies or
individuals, before issuing directions or guidelines or circulars under
section 466A.
UTPAL KUMAR SINGH,
Secretary-General.
Digitally signed
KSHITIZ by KSHITIZ
MOHAN MOHAN Date: 2026.03.23
21:05:37 +05'30'
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