The Corporate Amendment Bill, once cleared by Parliament, would change how company law violations are classified and penalties calculated, while easing compliance processes, industry stakeholders said. Companies and limited liability partnerships should prepare for reclassified offences and increased digitisation of regulatory filings, they added.
The Bill will introduce changes to the Companies Act, 2013, and the Limited Liability Partnership Act, 2008, and is likely to be tabled in the second half of the Budget session, which resumes on March 9, according to a government official.
The most crucial and immediate area of impact for companies will be offence reclassification and penalty rationalisation, once the new Bill is enacted. Building on the philosophy introduced by the Jan Vishwas (Amendment of Provisions) Act, 2023, several compoundable and minor procedural offences are likely to move further away from criminal prosecution towards in-house civil adjudication.
Industry executives said companies will have to revisit their internal risk registers and compliance readiness once the new law is enforced, as offences that previously carried imprisonment or criminal prosecution may now attract monetary penalties determined through adjudication by the Registrar or designated officers.
Further, “businesses should prepare for possible revisions in statutory forms, changes in filing timelines and reporting formats, recalibrated penalty structures, expanded powers of adjudicating officers, and greater digitisation of compliance processes," said Amit Maheshwari, Managing Partner, AKM Global.
Companies should also closely monitor changes to penalty computation frameworks. "There is a clear policy trend toward proportional and tiered fines. Instead of flat penalties, the law is trying to differentiate between small companies, start-ups, producer companies, LLPs, and large listed entities," said Rishi Agrawal, co-founder of Teamlease Regtech.
Industry officials said that adjudication mechanisms are becoming more system-driven. The Ministry of Corporate Affairs (MCA), through its MCA21 platform upgrades, has steadily moved toward digital filings, web-based forms, auto-validation and API-enabled submissions.
Greater digitisation reduces discretion and physical interface but increases the importance of data accuracy. Companies should therefore audit their master data Corporate Identification Number (CIN) details, director information, registered office records, authorised capital structures and ensure internal ERP systems align with MCA schema requirements, they said.
“The success of the reform will ultimately depend on clear transition guidance — otherwise, the compliance burden risks changing in structure rather than reducing in substance,” said Maheshwari.
CSR-overhaul proposed
Meanwhile, the government is likely to table the Companies (Amendment) Bill, 2025 as well in March. This Bill proposes to change the framework of Corporate Social Responsibility (CSR) materially.
According to the Bill, the most significant change is the lowering of financial thresholds. This brings thousands of mid-sized companies under the mandatory 2% spend rule for the first time.
The 2% spend rule is a mandatory requirement under Section 135 of the Companies Act, 2013. It requires eligible companies to spend a specific portion of their earnings – average net profit for past three financial years--on social welfare activities. Companies with net profit of Rs 5 crore or more are currently mandated to undertake CSR spending. This threshold will now reduce to Rs 3 crore or more.
The Bill also mandates that the company's CSR Committee include at least one director with "extensive experience" in planning and implementing CSR projects. This stops boards from simply assigning three random directors to a committee.
These changes, according to the industry executives, may have board-level implications. With the changes proposed on applicability thresholds, committee composition requirements and reporting formats, boards will need to review CSR policies, charters and disclosure language in the Board’s Report. "Given the increasing scrutiny on ESG and sustainability reporting, alignment between CSR disclosures and financial statements will be critical, they say," said Agrawal.
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