Regulatory Framework Governing Gifts to Shareholders: In corporate practice, companies have historically expressed appreciation towards their shareholders through souvenirs, coupons or other forms of small tokens. This was particularly common when physical shareholder meetings were regularly conducted prior to the COVID period in certain Indian promoter operated companies.

A frequently asked question is whether companies are permitted to distribute gifts to shareholders? The position under law is fact sensitive and not absolute. However, the regulatory framework places certain restrictions, particularly where gifts are distributed at or in connection with a general meeting, as such practices may raise concerns regarding influence on shareholder voting.

Accordingly, it becomes important to understand the regulatory position under the Companies Act, 2013 read with Secretarial Standard-2 on General Meetings.

Section 118(10) of the Companies Act, 2013 requires companies to comply with the Secretarial Standards issued by the Institute of Company Secretaries of India and Clause 14 of Secretarial Standard-2 provides that:

“No gifts, gift coupons, or cash in lieu of gifts shall be distributed to members at or in connection with the meeting.”

The intent behind this provision is rooted in corporate governance considerations. Distribution of gifts at the time of a general meeting may give rise to a perception that shareholders are being influenced while exercising their voting rights.

At the same time, the Guidance Note -2 on General Meetings issued by The Institute of Company Secretaries of India, to the aforementioned clarifies that certain practical aspects which are to be considered for companies are:

• The restriction primarily applies to gifts distributed at the meeting or in connection with the meeting.
• One of the key concerns is that such distribution may benefit only those shareholders who physically attend the meeting.
• Any benefit provided with the intention of influencing the decision of members may also fall within the scope of a prohibited gift.

However, the guidance also clarifies that certain practices would not be treated as prohibited gifts. These include provision of tea, coffee, snacks or light refreshments as a matter of courtesy at the meeting venue.

Regulatory Interpretation in Practice: A relevant regulatory example can be seen in the order passed by the Regional Director (Southern Region) in the matter of Madras Fertilizers Limited AGM Gift Card Case. In this matter, the company had issued SBI gift cards to minority shareholders during an AGM conducted through video conferencing. The company’s explanation was that the gift cards were provided in lieu of refreshments that would ordinarily have been served during a physical AGM.

Since the meeting was conducted during the COVID period, the company extended the gesture as a substitute for the refreshments that could not be provided in a virtual meeting. However, the authorities held that the company had violated Clause 14 of Secretarial Standard-2 on the basis that the gift cards were distributed in connection with the AGM.

Concerns Raised from a Governance Perspective: The Ministry of Corporate Affairs has also noted instances where companies distributed gifts, coupons or other benefits during AGMs. It was observed in certain representations that, in some cases, shareholders appeared more interested in collecting gifts or coupons than participating in the actual proceedings of the meeting. Concerns were also raised that such practices could dilute discussion on agenda items and proposed motions.

The Ministry emphasised that companies should refrain from distributing gifts or inducements during AGMs and that only light refreshments as a matter of courtesy may be provided. The underlying objective of this position is to ensure that the integrity of shareholder participation and voting is preserved.

Reading the Position: From the above, it can be understood that the restriction is not on gifting per se, but on gifting which is linked to the conduct of a general meeting.

The concern primarily appears to be on timing of the benefit; linkage with the meeting; and possibility of influence on shareholder decision making.

At the same time, it is also relevant to note that benefits which are extended uniformly and not linked to the meeting may not attract the same level of regulatory concern.

What is Allowed: While Secretarial Standard-2 restricts distribution of gifts in connection with meetings, it does not mean that companies are completely prohibited from extending benefits to shareholders.

Key compliance considerations from a practical standpoint, companies should keep the following aspects in mind:

• Gifts should not be distributed at or in connection with an AGM;
• Any benefit should not be linked to attendance, participation, or voting at a meeting;
• Promotional offers or coupons should be uniformly available to all shareholders;
• The purpose of any benefit should remain corporate goodwill rather than influencing shareholder decisions.

Intent Behind Allowing and Restricting Certain Practices: The distinction appears to be based on preserving the integrity of shareholder meetings. While companies are allowed to engage with shareholders and extend goodwill gestures, the law seeks to ensure that such gestures do not have any bearing, direct or indirect, on shareholder participation or voting at a general meeting.

Accordingly, what is restricted is not the act of gifting itself, but the possibility of such gifting being perceived as an inducement.

Conclusion:

The regulatory framework does not prohibit companies from expressing appreciation to their shareholders. However, it is important that such gestures remain clearly separated from the conduct of shareholder meetings and the exercise of voting rights.

The post Gifting to Shareholders – Courtesy or an Inducement in Disguise? first appeared on MMJC.

1. Requirement of minimum two members :-

We all have learnt that in case of a private limited company, minimum two members personally present are required to constitute a quorum to convene a general meeting. Minimum two members are required to incorporate a private limited company. We all know these basic provisions about a private limited company. Some sections of the Companies Act, 2013 (hereinafter referred to as “the Act”), possibility of one member constituting quorum is mentioned. These provisions we can find under section 97 and 98 of the Act.

2. Situations where One member quorum is allowed as per the Act:-

A. Section 97 of the Act:-

1. Section 97 of the Act gives right to member or director of the company   to apply to tribunal for convening a annual general meeting.
2. This right they can exercise only when there is a default made in holding the annual general meeting under section 96 of the Act.
3. Tribunal can give such directions including that one member of the company present in person or by proxy shall be deemed to constitute a meeting.  
4. Tribunal has the power to give such ancillary or consequential directions as it thinks expedient.
5. This is applicable irrespective whether it is private limited or public limited company.

B. Section 98 of the Act

1. Tribunal has power to order a meeting other than annual general meeting to be called, either suo motu or on application made by director or member who would be entitled to vote at meeting.
2. Application can be made for any reason it is impracticable to call a general meeting
3. Tribunal may give such ancillary or consequential directions as it thinks fit
4. Tribunal can give such directions including that one member of the company present in person or by proxy shall be deemed to constitute a meeting.
5. This is applicable irrespective whether it is private limited or public limited company.  

3. We will discuss one genuine situation of a private limited company, which had only two members. One member died leaving one member and one director only in a company. The articles of the company were having following clause for adjourned meeting of members

“If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the member present shall be the quorum.”

We will discuss this situation once we go through section 103 of the Act and various views which can be taken irrespective of the above situation.

4. Let’s read section 103 of the Act

“103. Quorum for meetings.

 [(1) Unless the articles of the company provide for a larger number,—

(a) in case of a public company,—

(i) five members personally present if the number of members as on the date of meeting is not more than one thousand;

(ii) fifteen members personally present if the number of members as on the date of meeting is more than one thousand but up to five thousand;

(iii) thirty members personally present if the number of members as on the date of the meeting exceeds five thousand;

(b) in the case of a private company, two members personally present, shall be the quorum for a meeting of the company.

(2) If the quorum is not present within half-an-hour from the time appointed for holding a meeting of the company—

(a) the meeting shall stand adjourned to the same day in the next week at the same time and place, or to such other date and such other time and place as the Board may determine; or

(b) the meeting, if called by requisitionists under section 100, shall stand cancelled:

Provided that in case of an adjourned meeting or of a change of day, time or place of meeting under clause (a), the company shall give not less than three days notice to the members either individually or by publishing an advertisement in the newspapers (one in English and one in vernacular language) which is in circulation at the place where the registered office of the company is situated.

(3) If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum.”

5. Lets analyse section 103 of the Act. There can be three possibilities to take a view that one member can constitute a quorum for Private Limited :-

1. Applying interpretation principles – purposive interpretation
2. By analysing the exemption notification no. G.S.R. 464(E) dated 5^th June 2015 amended from time to time.
3. The precedent in the form of judgement available in favour of one member quorum

6. Lets look at the first one- Purposive Interpretation:-

1. The first point which strikes our mind is, sub-section (1) provides for minimum number of members who shall form quorum for both private limited and public limited companies.
2. If there is adjournment, sub-section (3) states that if quorum is not present within half-an-hour from the time appointed for holding meeting, the members present shall be the quorum.
3. In case of public company, minimum five members are required to be personally present to constitute quorum for general meeting. As per sub-section (3) of section 103 of the Act, any number below five can constitute quorum at adjourned meeting. The said adjourned meeting members present shall be the quorum. It indicates even if the number is below five but above one because it uses word “members”, it will be valid.
4. In case of private limited company, the minimum number for quorum itself is two members personally present.
5. As per the interpretation principles sometimes addition or alteration of words is permissible when a statutory provision is ambiguous or to avoid patent absurdity, repugnancy or inconsistency. The Privy Council in Corporation of the City of Victoria V Bishop of Vancouver Island AIR 1921 PC 240 has laid down thus:-“In the construction of statutes their words must be interpreted in their ordinary grammatical sense, unless there be something in the context, or in the object of the statute in which they occur, or in the circumstances with reference to which they are used, to show that they were used in a special sense different from their ordinary grammatical sense”
6. In case of private company, if the minimum number to form a quorum itself is two then considering that for adjourned meeting also intention is to have minimum 2 under sub-section (3) will become absurd.
7. Further, Section 13 of the General Clauses Act, 1897 provides that in all (Central Acts) and Regulations, unless there is anything repugnant in the subject or context, words in singular shall include the plural and vice versa. This also supports the view taken above.
8. Hence, if we apply the purpose interpretation, a view can be taken that in certain genuine situations one member quorum can be valid.

7. Now let’s also analyse the exemption notification for Private Limited Companies:-  

1. Private limited companies enjoy certain exemptions vide notification G.S.R. 464(E) dated 5^th June 2015 amended from time to time. The relevant extract is stated below :-“Section 101 to 107 and 109 shall apply unless otherwise specified in respective sections or the articles of the company provide otherwise.”
2. If we refer the above exemption, section 103 related to quorum is falling under the exemption notified for private limited company.
3. The opening statement of sub-section (1) of section 103 of the Act states that “Unless the articles of the company provide for a larger number”. Hence in case of private limited companies, the articles cannot prescribe otherwise than mentioned both under sub-section (1) and sub-section (3). Sub-section (1) of Section 103 states the minimum members required to be personally present to form a quorum and sub-section (3) states that in case of adjourned meeting the members present form a quorum. Hence articles of public company cannot have any other clause which is going below the minimum stated.  
4. But in case of private limited company, if it is eligible to claim exemption as per the notification no  G.S.R. 464(E) dated 5^th June 2015 amended from time to time, the articles can state otherwise than provided in sub-section (3) of section 103 of the Act.
5. There are lot of judgements available on this subject where courts have held that minimum 2 members are required to conduct a valid meeting. 
6. Now the question arises when the meeting is adjourned for want of quorum and the company as availed the exemption under section 103 of the Act stating following for adjourned meeting quorum “If at the adjourned meeting also, a quorum is not present within half-an-hour from the time appointed for holding meeting, the member present shall be the quorum.”
7. As per the exemption notification, articles of private company can state otherwise. If we also consider circumstances where only one member is left in the Company due to death of another member. Transmission of shares will take some time due to legal formalities. In such case only a member entered into register of member can vote on the resolutions by way of show of hands or in person or by proxy in case of poll.
8. In such situations, can it be said that article may provide otherwise than mentioned in sub-section (3) even to have a member present as quorum?

8. Let’s see the Judgement where one member quorum is accepted by the Court

1. In case of Jarvis Motors (Harrow) Ltd V Carabott and another (1964) 34 Comp Cas 921 in the Chancey Division (before Ungoed-Thomas, J) .It was a private company. It was having only two shareholders, Mr. Carabott and Mr. Jarvis.  There was dispute between them. The general meeting was convened. One shareholder refused to attend to prevent a quorum.  The Articles of Association adopted Regulation 54 of Table A (Companies Act, 1948, UK), which stated:“If at the adjourned meeting a quorum is not present within half an hour… the members present shall be a quorum.”
2. Further, there were restrictions on transfer of shares too that the shares shall be transferred to existing members only. Hence there was a deadlock situation.
3. The meeting was adjourned due to lack of quorum. At the adjourned meeting, only one shareholder (holding 50% shares) was present. 
4. He declared himself the quorum and passed resolutions. The absent shareholder challenged this, citing Sharp v. Dawes (that one man cannot constitute a meeting).
5. Thomas J. reasoned that if the adjournment clause also required two members, it would be repetitive and effectively useless (otiose). It would allow a dissenting shareholder to permanently stall the company’s business simply by not showing up. To give the Articles “business efficacy,” the single member must be allowed to form a quorum.
6. There is no such judgement in favour of one member quorum in India yet.

9. Summary

1. If sub-section (1) uses the words minimum 2 members personally present to form a quorum and if the sub-section (3) also gives the same requirement of having minimum 2 to form a quorum in case of adjournment too, then that will lead to absurdity. As per the rules of interpretation, we must read the act harmoniously.
2. Section 13 of the general Clauses Act, 1897 provides that in all (Central Acts) and Regulations, unless there is anything repugnant in the subject or context, words in singular shall include the plural and vice versa. If we apply the purposive interpretation to the term “members” used in sub-section (3) then in this context it can be considered as “member”.  
3. Exemption notification G.S.R. 464(E) dated 5^th June 2015 amended from time-to-time exemption private limited companies from certain sections or provisions, exempts from section 101 to 107 and 109 unless otherwise provided in respective sections or the articles of the company provide otherwise. If the private limited company is eligible for availing exemptions and its articles provides otherwise for sub-section (3) of section 103 of the act, then it shall prevail.

10. Conclusion

It can be stated that looking at the difficulty and genuine situation of each case, the court/tribunal may accept that in case of private limited companies at adjourned meeting a single member present can constitute a valid quorum.

This article is published on taxmann link below.

https://www.taxmann.com/research/company-and-sebi/top-story/105010000000028231/can-one-member-of-a-private-limited-company-be-valid-quorum-for-general-meeting-experts-opinion

The post Can one member of a Private Limited Company be valid quorum for general meeting? first appeared on MMJC.

Following our analysis of structural changes in Part I, this second part focuses on amendments in Sections 206 and above of the Companies Act, 2013, proposed in the Corporate Laws (Amendment) Bill, 2026. Key highlights include the centralisation of merger jurisdictions, mandatory dormant status for inactive entities, and a revamped adjudication machinery featuring Recovery Officers and Settlement Authorities. We also examine the widened eligibility for voluntary strike-off and the transfer of restoration powers to the Regional Director, aimed at streamlining administrative exits and protecting external stakeholders. The significant amendments introduced in this Part are as follows:

I. Mergers and Amalgamations (Sections 230, 233)

• Section 230: Where multiple companies are involved in a scheme, the application shall be filed only before the NCLT bench having jurisdiction over the Transferee Company, eliminating multiple applications.
• Section 233 (Fast-track Merger):
  • Creditor Consent: The threshold for creditor approval is lowered from 9/10ths to 75% in value, aligning it with the requirements of Section 230.
  • Present and Voting: Clarification that the 75% majority is calculated based on creditors/members “present and voting” (in person or by proxy/postal ballot), rather than the total value/number.

II. Strike-Off (Sections 248, 252)

• Section 248 (Strike-Off Conditions): A company cannot be struck off if it has carried out any Significant Accounting Transaction during the current or previous financial year.
• A company is now ineligible for strike-off (either suo moto by ROC or voluntary under 248(2)) if it has performed a Significant Accounting Transaction in the current financial year.
• Pursuant to the omission of the reference to sub-section (1) from sub-section (2) of section 248, the grounds for voluntary strike-off are no longer restricted to the specific technical defaults listed for the Registrar’s suo motu action
• Section 252 (Restoration): Powers to restore a struck-off company are transferred from the NCLT to the Regional Director (RD) to expedite administrative relief, if the application of restoration made within 3 years of struck off.

III. Special Entities (Sections 366, 378P, 378Y)

• Section 366 (Conversion): Provisions expanded to allow the registration of Non-Trading Companies registered with state governments into section 8 companies under this Part, facilitating a smoother transition for existing entities into the Companies Act framework.
• Producer Companies:
  • Section 378P: The directors can be appointed in any General meeting, earlier restricted to Annual General Meeting
  • Section 378Y: Quorum of General meeting related provision modified to allow producer company to have a quorum of at least one-fourth of the total members or 100, whichever is less.

IV. Adjudication and Recovery (Sections 454, 454B, 454C)

Section 454 (Adjudication): 

• Authority: Designation of Assistant Registrar of Companies (AROC) as an Adjudicating Officer to handle adjudication proceedings
• Application: Introduction of a prescribed form for companies to suo moto apply for adjudication of a default.
• Section 454B (Recovery): Appointment of a Recovery Officer with powers to attach/sell movable and immovable property and, in extreme cases, arrest and detention of the defaulter in case of failure to pay penalty under this Act.
• Section 454C (Settlement): Enables settlement of defaults before an adjudication order is passed. Settlement is restricted to civil defaults and generally excludes “Serious Fraud” or non-compoundable offences.

V. Penalties and Compounding (Sections 403, 441, 446B, 447)

• Section 403 (Additional Fee): Empowers CG to make rules under first proviso to section 403(1) instead of minimum additional fee for delayed filing set at ₹100 per day. Furthermore, CG can prescribe certain classes of companies, for which maximum cap is prescribed for additional fees to Rs. 2 lakhs
• Section 441 (Compounding): RD’s power to compound offences increased to cases where the fine is up to ₹1 Crore from 25 lakh.
• Section 446B (Lesser Penalties): The “Lesser Penalty” benefit for Small Companies/Startups is redefined including a fixed percentage (e.g., 50%) of the standard penalty.
• Section 447 (Fraud Threshold): The monetary threshold for “Serious Fraud” (attracting mandatory imprisonment) is increased from ₹10 Lakh to ₹25 Lakh.

VI. Miscellaneous Provisions (Sections 455, 466A)

• Section 455 (Dormant Company): The phrase “may apply” is replaced with “shall apply”, making the transition to dormant status as a mandatory instead of a matter of choice for the company. Thereby preventing misrepresentation of active status and ensuring transparency for external stakeholders.
  • In defining “Inactive Company,” the word “and” is replaced with “or”, making the criteria cumulative (no filing of financial statements or annual return) aligned with section 164 of the Companies Act, 2013
• Section 466A (Administrative Power): Section empowering the Central Government to issue Directions, Guidelines, and Circulars to provide clarity on procedural ambiguities without amending the Rules if CG is of the opinion that it is necessary in the public interest. Further it is clarified that in case of any conflict, the rule shall prevail.

The Corporate Laws (Amendment) Bill, 2026, was introduced in the Lok Sabha on March 23, 2026, and has been referred to a Joint Parliamentary Committee (JPC) for detailed scrutiny. These provisions remain proposals and will carry statutory force only once approved by Parliament and formally enacted through notification in the Official Gazette

The post Key Highlights of the Companies (Amendment) Bill, 2026: Part II first appeared on MMJC.

The Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on Monday 23 March, 2026, proposes extensive amendments to the Companies Act, 2013, and the Limited Liability Partnership Act, 2008. Driven by recommendations from the Company Law Committee (2022) and the High Level Committee on Non-Financial Regulatory Reforms, the Bill seeks to foster “Ease of Doing Business” while simultaneously strengthening corporate governance frameworks.

Measures for Ease of Doing Business:

• Small Company Threshold [Sec. 2(85)]: Paid-up capital limit increased from ₹10 crore to ₹20 crore; turnover limit increased from ₹100 to ₹200 crore.
• Electronic Service [Sec. 20]: Service of prescribed documents to members permitted exclusively through electronic mode for certain classes of companies.
• Share-Linked Schemes [Sec. 62]: Formal recognition of Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs).
• Buy-back Frequency [Sec. 68]: Allows two buy-back offers per year with a six-month gap between closures in case of certain classes of companies.
• Charge Registration [Sec. 77]: Timeline for registration of charges for prescribed companies increased from 120 days to 180 days
• Virtual/Hybrid Meetings [Sec. 96 & 100]: AGMs and EGMs permitted via video conferencing or audio-visual means. However, companies must conduct a physical annual general meeting at least once every three years.
• Meeting Notice [Sec. 101]: Notice period for VC-only EGMs reduced to seven days.
• CSR Threshold [Sec. 135]: Applicability based on net profit -The Central Government is empowered to fix and modify the specific net profit applicability criteria
• Auditor Exemption [Sec. 139]: Prescribed classes of companies may be exempted from appointing auditors.
• Board Meetings [Sec. 173(5)]: OPC, Small, and Dormant companies require only one meeting per calendar year.
• Disclosure of Interest [Sec. 184]: Disclosure required only upon a change in interest, not every financial year.
• Investment Loans [Sec. 186]: Contraventions of sub-sections (9) and (10) moved from non-compoundable to adjudicatable offence.

Corporate Governance Related Provisions:

• Mandatory Digital Infrastructure [Sec. 12A]: Prescribed classes of companies must maintain a website and e-mail address, with a statutory requirement to intimate these details and any subsequent changes to the Registrar.
• Enhanced Audit Committee Transparency [Sec. 134]: Board reports must now include the committee’s composition and specific reasons if the Board rejects any committee recommendation.
• Explanation on Auditor Remarks [Sec. 134]: The Board must provide detailed explanations or comments on every adverse observation, qualification, or reservation made by auditors in their report.
• Independence in Group Entities [Sec. 149]: Cooling-off restrictions for Independent Directors (IDs) now explicitly extend to the holding, subsidiary, or associate companies.
• Standardized Auditor Qualifications [Sec. 141, 148 & 204]:
  • Majority Qualification Requirement: A firm may be appointed as a statutory, cost, or secretarial auditor only if the majority of its partners practicing in India are professionally qualified for such appointment (Chartered Accountants, Cost Accountants, or Company Secretaries in practice, respectively)
  • Mandatory Registration of All Partners: Every partner of the firm, regardless of their specific area of practice within a multi-disciplinary setup, must be a person registered with a statutory institute or body established under an Indian law having powers of such registration.
• Restrictions on Non-Audit Services [Sec. 144]: Prescribed classes of auditors are prohibited from providing non-audit services to the company, its holding, or subsidiary for three years post-tenure
• Director Fit and Proper Mandate [Sec. 164]: Boards are now required to assess and ensure that every director meets prescribed “fit and proper” criteria as may be prescribed.
• Related Party Default Disqualification [Sec. 164]: Directorship eligibility is lost if a person is subjected to a penalty for defaults in related party transactions under Section 188.
• Resignation of Non-Director KMPs [Sec. 203A]: Establishes a formal, transparent process for the resignation of whole-time Key Managerial Personnel who are not directors. This framework is similar to that of directors under section 168.

Director Amendments (Appointment/Qualification/Vacation/DIN):

• Additional Directors [Sec. 161]: Tenure limited to next general meeting or three months, whichever is earlier.(Aligned with LODR Regulations)
• Casual Vacancy [Sec. 161]: Appointment limited to next general meeting or three months, whichever is earlier. (Aligned with LODR Regulations)
• DIN Verification [Sec. 154]: Mandatory periodic submission of information for verification of particulars.
• DIN Validity [Sec. 152]: Director shall not function if DIN is deactivated or cancelled.
• Disqualification [Sec. 164(2)]: Triggered by non-filing of returns for two financial years.
• Immediate Vacation [Sec. 167]: Office becomes vacant in all companies (including the defaulting one) after six months from trigger of disqualification.
• LLP Inclusion (Section 185 (Loans to Directors)): Prohibitions on loans, guarantees, and securities extended to limited liability partnerships.

Decriminalization (Fine to Penalty):

• Name Reservation [Sec. 4]: Penalty of ₹50,000 for furnishing incorrect information.
• Prospectus [Sec. 26]: Fixed penalty of ₹2 lakh for contravention.
• Share Variation [Sec. 40]: Penalty of ₹25 lakh for company and ₹2 lakh for officers in default.
• Buy-back [Sec. 68]: Penalty of ₹25 lakh for listed companies and ₹2 lakh for others.
• AGM Default [Sec. 99]: Penalty of ₹1 lakh plus ₹5,000 per day for continuing default.
• Accounts [Sec. 128]: Penalty of ₹5 lakh for listed and ₹50,000 for other companies.
• Audit Sections [Sec. 147]: Contraventions of Sec. 139, 140, 141, 142, and 146

The post Key Highlights of the Companies (Amendment) Bill, 2026 first appeared on MMJC.

The Ministry of Corporate Affairs (MCA), through its circular dated 26^th February 2026, has introduced the Companies Compliance Facilitation Scheme 2026 (CCFS 2026), for enabling the companies to complete their long pending annual filing at a discounted late fee. We shall try to understand the nuances of this scheme by looking at some Frequently Asked Questions (FAQs).

Q1. What is meant by the Companies Compliance Facilitation Scheme, 2026?

Ans: The CCFS-2026 refers to one-time opportunity provided by the Ministry of Corporate Affairs to allow companies to complete their pending annual filings or to opt for dormancy or closure with significantly reduced fees

The scheme aims at improving compliance levels and ensure that corporate registry has accurate, up-to-date information

Q2. What is the purpose of introducing the CCFS 2026?

Ans:  As per the circular, the Ministry had received representations stating that it is being difficult for the companies to file the annual filing forms pending since years, due to the exorbitant late fee charged on such delayed filings.

Hence the MCA has introduced this scheme, so that the companies can file the forms and make good their long pending non-compliance without having to pay heavy late fees. The scheme is desirous of facilitating compliances by MSMEs and small companies who may face cash crunch due to such heavy late fee.

Q3. What is the duration of the CCFS 2026?

Ans: The scheme comes into force on April 15, 2026, and shall remain effective till 15^th July 2026. The companies will have a window of 3 months for filing the pending annual filing forms with reduced late fee.

Q4. What are the eligibility criteria for the companies to take advantage of this CCFS 2026?

Ans: The scheme does not specify any eligibility criteria, instead it prescribes a negative list of companies who cannot take advantage of this scheme. That means, all the companies except those listed billow, can take advantage of this scheme.

The negative list includes the following companies.

• Companies already facing final notice for being “struck off” by the Registrar
• Companies that have already filed for strike-off or dormant status before the scheme began
• Companies already dissolved through amalgamation
• “Vanishing companies”

Q5. Are Limited Liability Partnerships (LLPs) eligible to take advantage of this scheme?

Ans:No. if we refer to the language of the CCFS 2026, it specifically refers to companies and does not have any mention about LLPs. Also, the list of forms which can be filed under CCFS 2026 does not include the names of LLP forms. Hence it can be said that the scheme does not apply to LLPs.

Q6. In the year 2019, companies were required to file an e-form INC-22A. if this form was not filed, the company was tagged as active non-compliant in MCA records, and as a result, company was not able to file certain forms like SH-7, PAS-3 etc. If any company has not filed this form INC-22A, then can it take benefit of this scheme?

Ans: Rule 25A of Companies (Incorporation) Rules 2014, provides for list of forms that cannot be filed if company has not filed form INC-22A. This list does not include annual filing forms. That means, even if the company has not filed form INC-22A, it can still file annual filing forms under CCFS 2026.

In fact, proviso to rule 25A states that form INC-22A cannot be filed unless pending annual filing is completed. Also, the form INC-22A requires mentioning of SRN of latest filed forms AOC-4 and MGT-7. Therefore, the company will have to first complete its pending annual filing under CCFS 2026 and only then it can file form INC-22A if not yet filed.

Q7. Which all forms can be filed with discounted late fee under CCFS 2026?

Ans: Since, the scheme aims at completing pending annual filing, it pre-dominantly allows filing of the annual filing related forms at a discounted late fee. Following is the list of forms which can be filed under this scheme:

-MGT-7 / MGT-7A – Annual Return

-AOC-4 / AOC-4 CFS / AOC-4 (XBRL)/ AOC-4 NBFC (Ind-AS) / AOC-4 CFS NBFC (Ind-AS)

-ADT-1

-FC-3

-FC-4 and

-Their corresponding forms under Companies Act 1956, like Form 20B, 21A, and 23AC) etc.

Other than this, companies desirous of obtaining dormant status or striking off their names from register of companies, can also file forms MSC-1 or STK-2 with discounted fees under this scheme.

Q8. How cost effective is filing of forms under this CCFS 2026?

Ans: Under this scheme, companies only need to pay the normal filing fee plus 10% of the total additional fees that would otherwise be due for the delay. This is a significant reduction from the standard additional fee of Rs. 100 per day of delay. For example, if form MGT-7 is being filed with a delay of 100 days, then filing fee will be RS. 600 and late fee will be RS. 10,000 (RS. 100*100 days)) that means, fee under normal circumstances will be RS. 10600. But, under this scheme, late fee is reduced to 10% of actual late fee, that is, 10% of 10000 which comes to 1000. Hence amount payable under scheme will be RS. 1,600 instead of RS. 10,600.

Q9. If any company is desirous of discontinuing its business operations, then does the scheme provide for any option to such companies? Ans: Inactive companies or such companies who do not wish to continue business, have two cost-effective options:

• they can Apply for “dormant company” status (by filing Form MSC-1 by paying only half of the normal filing fee

• also, they can Apply to be “struck off” by filing Form STK-2 by paying only 25% of the applicable filing fees

However, the scheme provides concession only in case of filing fees. The companies have to follow the complete procedure prescribed in the Companies Act in both these cases, which includes completion of pending annual filing and obtaining necessary approvals.

Q10. Is there any legal immunity granted to participating companies?

Ans: If filings are made under the scheme, no penalty under section 92 (Annual Return) or section 137 (Financial Statements) for delayed filing of forms, will be leviable Similar Immunity is also granted against prospective penal actions for delayed filings of other forms like ADT-1 or FC-3 etc.

Q11. Does the scheme prescribe any conditions for receiving this immunity?

Ans: Yes. The scheme clarifies that, For immunity from penal action WRT annual returns and financial statements, the filing must be made either before a notice is issued by an adjudicating officer or within 30 days of such a notice being issued

The scheme further clarifies that; immunity is not granted if a prosecution has already been filed or if adjudication proceedings began before the filing was made under the scheme.

Q12. Is the company required to undertake any extra filing for availing the above-mentioned immunity?

Ans: the similar amnesty scheme launched by MCA required the companies to file a separate form called CFSS-2020 after completing all pending filings. On filing of this form, a certificate was generated and after showing the same the immunities could be availed.

However, if we refer to CCFS 2026, it does not provide for filing of any extra form or generation/submission of any such certificate. Since not specifically mentioned, it can be concluded that, no additional compliances are required for availing the legal immunities.

Q13. If the company has not done annual filing for more than 3 years and as a result, the directors of the company have been disqualified under section 164(2) of the Companies Act 2013, in such circumstances, if the company does annual filing under this scheme, then will the disqualification of directors be removed post filing?

Ans: if the company has not filed financial statements or annual returns for more than 3 years, then the directors are disqualified under section 164(2) by act of law.

As per Para 65 and 66 of judgment in the matter of Mukut Pathak & Ors. Vs. Union of India and Anr. Delivered by Delhi High Court, it is clarified that, the disqualification takes place as per conditions specified in the Act and not by order of any authority. Also, this disqualification aims at highlighting the fiduciary duties of directors.

Therefore, the director ones disqualified, will remain disqualified for period of 5 years even if the company completes its annual filing post disqualification.

Additionally, the scheme talks about providing financial relief to the companies by relaxing the late fees. It does not specifically mention any thing about removal of director disqualification.

Q14. Since year 2019, some documents like statutory audit report or secretarial audit report filed along with financial statements, require mention of UDIN generated by ICAI/ICSI on the date of signing that document. Can the professionals sign the audit reports for previous years along with the UDIN generated as on current date.

Ans: The requirement of mentioning the UDIN became applicable from year 2019. Therefore, in case of the reports bearing dates prior to year 2019, there is no requirement of generating or mentioning UDIN on the documents.

With respect to documents to be certified by company secretaries in practice post 1^st October 2019, ICSI has introduced an amnesty scheme under which the company secretaries in practice (PCS)shall be able to generate UDIN for documents signed after 1^st October 2019. Hence the PCS can generate UDIN for documents (MGT-8, MR-3 etc.) relating to financial statements post 2019 under ICSI amnesty scheme 2026 from 1^st April 2026 to 15^th April 2026. (that is, before the CCFS becomes effective)

Q15. As proposed by the scheme, the financial statements and annual returns for earlier years shall be filed by the companies on and after 15th April 2026. However, in between the time to which financial statements relate, and time when they are filed, the applicable legal provisions and formats may have undergone changes. In such circumstances, the companies should prepare the financial statements as per earlier provisions or the current provisions?

Ans: The format for preparation of financial statements shall depend on the date of their approval and signing by the directors. If the financial statements were prepared, approved and signed by the directors during the relevant earlier year but only filing was pending, then they must have been prepared as per formats applicable at that time, which shall be acceptable.

However, if the statements are being prepared and signed today (March 2026), then they will have to be prepared as per currant formats.

For example, format of financial statements prescribed under schedule III of Companies Act 2013 and format of statutory auditor report were amended from FY 2021-22, So if the financial statements for year 2017-18 were prepared and approved in the year 2018 and are being filed in 2026 under CCFS 2026, then old formats are acceptable. But if financial statements for FY 2017-18 were not prepared at that time and are being prepared and approved by board now (March 2026) then the new formats will have to be used.

Q16. Form filing requirements for small and normal companies are different with respect to applicable e-forms and certification requirements. The definition of small company underwent a change in the month of December 2025. If a company is desirous of filing forms for year 2022-23, and it was not a small company as per the definition at that time, but it is one as per new definition. Then whether it should undertake filing as small company or normal company?

Ans: The MCA V3 portal on the website of Ministry of Corporate Affairs is tuned to except filing as per new definition. Therefore, ones the turnover or paid-up capital of the company is entered, the system will prompt to file e-form MGT-7A and will not ask for certification of professional in form AOC-4. Therefore, it will have to undertake filing as a small company only.

Q17. The annual filing related e-forms like MGT-7, AOC-4 and ADT-1 etc. have migrated to MCA V3 portal in July 2025. Now if the companies are desirous of filing forms for earlier years under CCFS 2026, then the companies will have to do filing on V3 portal or V2 portal will be enabled for this purpose?

Ans: Since the V2 portal is now disabled and as on date forms can be filed only through V3 portal, the companies will have to file new forms available on V3 portal only.

Q18. During the period when the scheme is in force, if a company is filing the forms for financial year 2025-26, will it be subject to discounted filing fee?

Ans: The scheme states that it aims at, helping the companies to clear its pending annual filing for earlier years, and provides concession on payment of late fee and not on normal filing fee.

Say if the AGM of the company for FY 2025-26 is held in April 2026, and the due date for filing AOC-4 is in May 2026 and for MGT-7 is in June 2026. Now if the company files both the forms till June 2026, then it will not be subject to late fee and hence will not get any benefit of the scheme.

However, if it does file in July, then late fees will be charged, and it will also be able to avail discount under CCFS 2026.

Q19. If annual filing by any company is pending for financial year 2024-25, then will it be able to take advantage of this scheme?

Ans: the normal time available for filing annual filing forms for FY 2024-25 has already passed and now if any company is filing the forms for said financial year, then it will have to be done by paying late fees. Since the scheme provides for discount on late fees if forms are filed under the scheme, the company can take advantage of the scheme for filing forms for FY 2024-25.

Q20. If any company has filed form AOC-4 for any particular year, but has not filed form MGT-7, then will the company be able to take advantage of the scheme for filing only one out of 2 annual filing forms?

Ans: the scheme provides discount on late fees payable on each form. It does not provide any such condition that a particular group of forms has to be filed. Therefore, even if any company is desirous of filing any one out of 2 annual filing forms, it can very well do so.

Q21. If company is filing the annual filing forms for earlier years, then what would be the date of AGM for approval of financial statements to be mentioned in form?

Ans: if the company has conducted AGM for relevant earlier year and has got the financial statements approved, then such date can be entered. However, if AGM was not conducted, company may now conduct the AGM, get the financial statements approved and then file the same in the form.

Q22. If the company had not conducted AGM in the relevant financial year and not approved financial statements, and the company now conducts the AGM and files the approved financial statements under CCFS 2026, then will the company be relieved from non-compliance of not/delayed conduct of AGM?

Ans: Non-conduct of AGM is altogether a separate non-compliance with section 96 of Companies Act 2013, which is not covered under CCFS 2026. Non-compliance of section 96 is a compoundable offence for which the company has to file an application before NCLT and get the same compounded separately.

Q23. Does this scheme apply to form CSR-2 as well?

Ans: Form CSR-2 relates to annual CSR spending by companies and is connected to form AOC-4. Till financial year 2023-24, CSR-2 was to be filed as a separate form in which SRN of form AOC-4 was to be entered. Therefore, if any company had not filed AOC-4 for any year till 2023-24, it was technically not able to file CSR-2.

Post migration to the MCA V3 portal, Form CSR-2 has been integrated into Form AOC-4. Accordingly, where pending AOC-4 forms relating to earlier financial years are required to be filed on the V3 portal, the corresponding CSR-2 details can be filed as part of AOC-4 itself, and no separate fee would be applicable for CSR-2.

Q24. Does CCFS 2026 applies to cost audit related forms like CRA-2, CRA-4 etc.?

Ans: The list of forms specified in the scheme document for which benefits are available does not include cost audit–related forms. In the absence of any express inclusion, it may be inferred that the scheme does not extend to such forms.

Q25. If the company is desirous of refiling any annual filing form with some changes, then will it be able to take advantage of this scheme? 

Ans: In case of Form MGT-7, revision is generally permitted only where the AGM has not been held and the reason for non-holding of the AGM has been specified in the form. Once the AGM is subsequently held, the company may file a revised Form MGT-7 by updating the AGM-related details.

In respect of both Form AOC-4 and Form MGT-7, where any change, error, or omission is identified after filing and the form is required to be modified, the original SRN would be required to be cancelled, followed by filing of a fresh form. Such fresh filing would attract the applicable normal filing fees and additional fees, if any, depending on the delay. Accordingly, where a revised AOC-4/MGT-7 is filed under CCFS 2026, the benefit of fee concession under the scheme may be availed.

Q26. As discussed in question 4, companies already facing final notice for being “struck off” by the Registrar cannot take advantage of this scheme. What is meant by ‘final notice for being struck off’ in this case?

Ans: In this context, the final notice refers to the notice issued by the ROC in Form STK-7, signifying that the striking off process has been completed and the company’s name has been removed from the register of companies. Consequently, once such final striking off has taken effect, the company is no longer eligible to avail the benefit of the scheme.

MCA- FAQs on the Companies Compliance Facilitation Scheme, 2026 (CCFS-2026)

Q1. Is the Scheme also available in cases where the financial statements of the company for the past years have not been audited?

ANS: The Scheme facilitates filing of overdue financial statements and annual returns, including e-Form ADT-1. Accordingly, a company is required to have its accounts audited for the relevant financial years and file the same after obtaining a valid Unique Document Identification Number (UDIN) generated in accordance with the guidelines issued by the Institute of Chartered Accountants of India.

Q2. What happens if a company does not avail the Scheme?

ANS: After the Scheme closes, the defaulting companies are liable to be subject to enforcement action, including striking off from the register.

Q3. Can a company use the Scheme to regularize multiple pending filings?

ANS: Yes. The Scheme is intended to facilitate filing of relevant overdue forms and may be used to regularize multiple pending filings, subject to eligibility and compliance with the applicable conditions.

Q4. In case the company intends to get its name struck off, is the company required to file only the form STK-2 form under the scheme at a concessional fees or is it mandatory to file all pending forms before applying for strike off?

ANS: The provisions of rule 4 of the Companies (Removal of Name of Companies from the Register of Companies) Rules, 2016 would become applicable, whereby in general company is required to file the financial statement and annual return up to the end of the financial year in which the company ceased to carry its business operations. However, in case the Registrar has initiated an action against the company under section 248(1), but the final notice in STK-7 has not been issued, then it shall file all pending overdue financial statements and annual returns

The post FAQs on CCFS 2026 first appeared on MMJC.

Introduction
When a company is unable to meet its preference share redemption deadline, the immediate instinct is to approach the Tribunal under Section 55(3) of the Companies Act, 2013. In practice, this route is often treated as the response to non-redemption.

However, this instinct overlooks a more fundamental question:  Does the proposed corporate action constitute a reissuance of capital or merely a modification of existing terms?

The answer to this question is critical, as it determines the appropriate statutory pathway and whether recourse to the Tribunal is warranted at all.

Where the Confusion Lies

A common misconception in practice is to equate inability to redeem preference shares with automatic applicability of Section 55(3). This approach assumes that any deviation from original redemption terms necessarily requires Tribunal intervention.

However, this overlooks the distinction between restructuring the capital itself and modifying the terms attached to existing shares. The failure to identify this distinction often leads to mischaracterization of transactions, resulting in unnecessary petitions under Section 55(3).

The distinction between a “Variation of Rights” under Section 48 and a “Reissuance” under Section 55(3) is governed by the statutory parameters of the instrument. Under Section 55(2), preference shares are subject to a mandatory redemption period typically 20 years, or 30 years for specified infrastructure projects.

The appropriate legal pathway is determined by the following criteria:

• Modification within Statutory Limits: Where a company proposes to extend the redemption timeline while remaining within the twenty or thirty-year limit, the action constitutes a “variation of rights” attached to the existing shares. Such modifications fall within the ambit of Section 48.
• Substitution and Reissuance: Conversely, where a company is unable to redeem the shares as per the original terms of issue, or where the proposed extension exceeds the statutory timeframe, Section 55(3) is triggered. This necessitates the issuance of fresh redeemable preference shares in substitution for the unredeemed shares.

Understanding the Distinction: Section 48 vs Section 55(3)

Judicial Clarification: EDAC Engineering Case
This distinction was examined by the NCLT, Chennai in EDAC Engineering Limited v. Registrar of Companies (order dated 21^st November 2025)[1]

The Tribunal considered whether extension of the redemption period of existing preference shares would amount to reissuance under Section 55(3) or a variation of rights under Section 48. Although the petition was framed as one seeking approval for reissuance, the company clarified that it was only seeking extension of the repayment timeline.

The Tribunal held that such extension alters the rights attached to the shares and therefore falls within Section 48. It further noted that the redemption period could be extended within the statutory limit of twenty years from the date of issue under Section 55(2). Accordingly, it concluded that Section 55(3) was not attracted as the extension sought was within the timeframe of twenty years and dismissed the petition.

Conclusion
The ruling reinforces that not every delay in redemption of preference shares requires recourse to Section 55(3). Where the company merely modifies the terms of existing preference shares, the matter may be addressed under Section 48, subject to the safeguards available to dissenting shareholders.

The manner in which the transaction is characterized determines the compliance route, and an incorrect approach may lead to unnecessary Tribunal proceedings. Where applicable, Section 48 avoids the time and effort of approaching the Tribunal.

[1] EDAC Engineering Ltd. v. Registrar of Companies, NCLT-Chennai-order dated 21-11-25

This article is published on the TaxGuru link below

https://taxguru.in/company-law/preference-share-extension-not-reissuance-statutory-limit-nclt.html

The post The classification of a transaction as either a variation of rights or a re-issuance of shares determines whether it falls within the ambit of Section 48 or Section 55(3) of the Companies Act, 2013 first appeared on MMJC.