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