Corporate Amendment Bill tabled in Lok Sabha; focus on easier compliance, stricter digital checks

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman has tabled the Corporate Amendment Bill in the Lok Sabha on Monday, March 23, proposing changes to the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008, as part of its ongoing effort to simplify compliance for businesses.The Bill is expected to take forward recent reforms that aim to reduce criminal penalties for routine corporate lapses while making compliance more streamlined and technology-driven.
Sources told CNBC-TV18 that the proposed amendments are likely to ease rules around share buybacks and mergers. Companies may be allowed to undertake buybacks more than once a year, while select firms could also see a relaxation in the existing 25% buyback limit.
Also read: India’s shrinking microfinance industry has forced the government to step inThe Bill is also expected to provide greater clarity on ESOP regulations and introduce a separate penalty framework for listed and unlisted companies.Sources further indicated that the amendments may strengthen enforcement by granting enhanced recovery powers to regulators such as NFRA and IBBI.
Continued push to decriminalise offencesThe proposed amendments are likely to further reduce criminal liability for technical and procedural defaults. Many such offences have already been shifted to monetary penalties in recent years, and the new Bill is expected to expand this trend.The broader goal is to make doing business easier by removing the risk of imprisonment for minor non-compliance.Faster, digital enforcementWhile criminal penalties may be reduced, enforcement is expected to become quicker. Penalties could be imposed through administrative processes instead of courts, speeding up decision-making.Also read: ATF cost hit may be visible from April 1, Aviation Minister warnsWith more filings and disclosures moving online, regulators will also be able to track errors and delays more easily.Compliance burden to remainExperts say the compliance burden is not going away—it is changing. Instead of legal risk, companies will face more continuous monitoring through digital systems.This could mean greater accountability for company management, especially when it comes to timely and accurate disclosures.
Bigger impact on smaller firmsLarge companies are better prepared for such changes as they already have systems and teams in place.Smaller companies and LLPs, however, may find it harder to keep up with frequent changes and may have to depend more on external advisors, increasing costs.Changes companies should trackOnce the law is updated, companies will need to review changes in offence categories, penalties, filing formats and reporting timelines. Any updates to CSR rules may also need attention.Even small changes in forms or filing rules could require updates to internal processes.Short-term adjustment phase likelyExperts expect some disruption in the initial months as companies adjust to new systems and formats. There could be delays or more frequent resubmissions during this period.Over time, however, increased automation is expected to make compliance smoother.Move towards system-based regulationThe reforms point to a larger shift toward digital, system-based compliance, with less manual intervention and stricter checks built into filing systems.This will require companies to strengthen internal processes and respond more quickly to compliance requirements.Possible regulatory changesThe Bill may also include changes related to regulatory bodies such as the National Financial Reporting Authority (NFRA), along with greater use of rules and notifications for updates.While the intent is to ease doing business, experts say clear rules and timelines will be important to avoid confusion.

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