The Centre has defended key proposals in the Corporate Laws (Amendment) Bill, 2026, saying the measures are aimed at promoting ease of doing business, reducing litigation, and enabling faster corporate restructuring.
Responding to a starred question in the Lok Sabha, Finance and Corporate Affairs Minister Nirmala Sitharaman said the proposal to double the statutory ceiling for paid-up share capital under the definition of a “small company” from ₹10 crore to ₹20 crore was necessitated as the existing ceiling had already been reached.
The minister said the amendment would provide the government flexibility to revise the threshold in line with the nature of businesses, their growth, and the expansion of the economy.
The government also highlighted its decriminalisation drive under the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008, saying the exercise has been carried out in phases since FY15 to promote trust-based governance and ease compliance for law-abiding businesses.
According to the ministry, the first phase under the Companies (Amendment) Act, 2019 decriminalised 16 compoundable offences by shifting them to an in-house adjudication mechanism. The Companies (Amendment) Act, 2020 decriminalised another 35 compoundable offences and removed imprisonment provisions for 11 offences, retaining only monetary penalties. Separately, the Limited Liability Partnership (Amendment) Act, 2021 decriminalised 12 offences under the LLP Act.
The government said these reforms have reduced litigation, improved corporate governance and struck a balance between facilitating compliance and ensuring stringent action against serious violations.
On corporate restructuring, Sitharaman said the government has progressively expanded the scope of the fast-track merger (FTM) framework under Section 233 of the Companies Act to provide a quicker and more cost-effective route for eligible mergers.
Originally available only for mergers between small companies or between a holding company and its wholly-owned subsidiary, the framework was expanded in 2021 to cover mergers involving start-ups. In 2024, the government permitted cross-border reverse flipping through fast-track mergers, allowing foreign holding companies to merge into their wholly-owned Indian subsidiaries.
The eligibility criteria were further widened in 2025 to include mergers between unlisted companies, excluding Section 8 companies, subject to each company’s aggregate outstanding borrowings not exceeding ₹200 crore. The revised framework also enables intra-group restructuring between holding companies and subsidiaries, as well as among fellow subsidiaries.
The minister added that the fast-track merger framework now provides for deemed approval to ensure eligible mergers are cleared within a 60-day timeline, further simplifying corporate reorganisations.
