With faster mergers and e-docs, amended Companies Act will target global competitiveness

Likely changes include a key proposal to speed up certain mergers, facilitate electronic document serving and e-adjudication of offences, and enable administrative restoration of companies struck off from the register without involvement of tribunals, said one of the persons quoted above. The measures aim to help Indian companies turn globally competitive and elevate the country's ranking in future editions of the World Bank’s Business-Ready index.

One of the proposals is to rework the shareholder voting parameters to enable faster clearance for mergers among start-ups, unlisted companies and a corporate parent and its wholly-owned subsidiaries. The idea is to ease the current requirement of 90% shareholder approval prescribed under Section 233 of Companies Act.

Physical to digital

Another proposal aims to ease the requirement of physical documents. At present, the law allows serving documents to the government or shareholders in physical or electronic mode, but if a shareholder asks for a physical copy, the company has to arrange for it for a fee. The amendment aims to make it sufficient for certain classes of companies to serve documents only in electronic format.

The amendments may also strengthen the powers of the National Financial Reporting Authority, especially in taking action against auditors for breaches other than ‘professional or other misconduct’, for example, not filing annual returns, the second person added.

However, the government is yet to finalize the proposals for allowing partnership firms to offer multiple services like legal, secretarial, accounting and auditing and actuarial services under one roof, as the feedback received from public consultation is under examination, said the person quoted above. “An expert committee will look into the feedback and take a view on it," said the person.

Queries emailed to the corporate affairs ministry seeking comments remained unanswered.

Light-touch

Finance and corporate affairs minister Nirmala Sitharaman had said in her budget speech this year that “a light-touch regulatory framework based on principles and trust will unleash productivity and employment." The idea is to have a modern, flexible and people-friendly regulatory regime.

Some of the changes may relate to upgrading the regulatory framework in the digital age, said Chandrajit Banerjee, director-general of Confederation of Indian Industry (CII).

“The need to send a notice of at least 21 clear days to conduct a general meeting is redundant since in today's digital age, information is rapidly disseminated and easily accessible to investors and the public. It may be reduced to seven clear days, which may be considered sufficient to ensure transparency, stakeholder preparedness and effective governance," said Banerjee.

The rule on printing and dispatching of physical copies of annual reports and financial statements need to be optional, Banerjee added.

Data privacy

The Act also needs to address disclosure requirements which compromise individual data privacy, as sensitive employee information becomes easily accessible in the public domain upon request by shareholders, Banerjee said. “This increases the risk of poaching and misuse, and poses a significant challenge for Indian companies in managing and retaining talent. Therefore, it is proposed that the requirement to disclose employee remuneration be eliminated or significantly relaxed to protect employee privacy and support sustainable talent management," Banerjee said.

Experts believe company law reforms should uplift investor sentiments. “Reforms to the Companies Act should aim to unlock India’s entrepreneurial energy by streamlining compliance, accelerating approvals, simplifying governance norms and decriminalizing minor offences," said Amit Maheshwari, partner-tax at AKM Global, a tax and consulting firm.

“Strengthening investor protection and enhancing corporate governance standards will further build trust and transparency in the business ecosystem. By leveraging technology and introducing differentiated compliance frameworks for startups and micro, small and medium enterprises, the corporate regime can become more agile and inclusive—fostering innovation and investment across sectors," said Maheshwari.

Experts also highlighted the restriction on appointing persons as managing director, wholetime director or manager of a company if a fine of ₹1,000 or more has been imposed on him for conviction of specific offences. “It is suggested that the threshold of ₹1,000 prescribed in Schedule V may be substantially enhanced, taking into account the current situation where most laws have fines more than this threshold," said Banerjee of CII.

A digitally enabled, growth-oriented Companies Act—harmonized with tax, insolvency, and securities laws—will enhance regulatory certainty and ease of doing business, added Maheshwari of AKM Global. Such forward-looking reforms are vital to sustain India’s economic momentum, deepen investor confidence, and reinforce its position as a leading global investment destination, he said.