India is preparing to overhaul key aspects of its corporate law framework, with proposals that would allow certain companies to carry out two share buybacks in a single year and accelerate merger approvals. The changes, introduced by Finance Minister Nirmala Sitharaman in Parliament, are part of a broader push to improve the business environment and modernise regulatory practices.
The Corporate Laws (Amendment) Bill, 2026, presented in the Lok Sabha, focuses on easing compliance requirements and streamlining procedures. It will take effect once it is cleared by both houses of Parliament.
More room for companies to manage surplus capital
A key feature of the bill is the proposal to permit select companies to undertake two share buybacks within a year, replacing the existing cap of one. These transactions would need to be spaced at least six months apart.
The government has described buybacks through tender offers as an effective route for distributing excess funds to shareholders. According to Atul Pandey of Khaitan & Co, this could offer companies with strong balance sheets and low debt levels a quicker and more flexible alternative to dividend payouts, while allowing management greater control over capital allocation.
The categories of companies eligible for this provision will be specified by the government at a later stage.
Shift towards a less punitive compliance regime
The bill also proposes to rework how certain corporate offences are treated by replacing criminal provisions with civil penalties. This move is intended to reduce the legal burden on businesses and encourage a more facilitative regulatory environment.
Anjali Malhotra of Nangia Global noted that the amendments reflect an effort to bring India’s corporate laws closer to international standards while making compliance more straightforward and less adversarial.
In addition, the proposed changes aim to ease regulatory requirements for Alternative Investment Funds structured as limited liability partnerships. Allowing AIFs to operate under LLP structures is expected to bring greater clarity to governance and liability frameworks.
Faster approvals for mergers and restructuring
The government has also proposed simplifying procedures for fast-track mergers and amalgamations, particularly in cases where shareholders holding at least 75 percent in both companies approve the deal. This is likely to benefit transactions involving parent companies and their subsidiaries, as well as smaller firms and startups.
Under the revised process, merger applications can be submitted to the tribunal that has jurisdiction over the transferee company, which could help cut down delays.
At the same time, the bill makes it clear that companies undergoing liquidation under insolvency laws will not be allowed to pursue mergers or compromise arrangements.
Tighter oversight of auditors
The amendments further seek to strengthen the authority of the National Financial Reporting Authority (NFRA) by expanding its scope of action. The definition of professional misconduct is proposed to be widened to include breaches of company law by auditors.
Stronger enforcement measures have also been outlined, including the possibility of fines, suspension, and even imprisonment for those who fail to comply with the regulator’s directives.
Taken together, the proposed changes indicate a clear attempt by the government to strike a balance between easing business operations and reinforcing accountability, as India looks to position itself as a more competitive and investor-friendly market.
