Corporate Laws (Amendment) Bill, 2026 – Key M&A & Restructuring Highlights

Background

The Corporate Laws (Amendment) Bill, 2026[1], introduced by Finance Minister Nirmala Sitharaman on 18th March 2026, proposes several significant changes to the M&A and corporate restructuring framework under the Companies Act, 2013 and the LLP Act, 2008.

Key Highlights:

1. Single Tribunal Jurisdiction for Schemes – All scheme applications under Sections 230-233 must now be filed before the NCLT having jurisdiction over the transferee or resultant company. One bench drives the entire process reducing coordination friction in multi-entity restructurings.
2. Fast-Track Merger – Thresholds Eased Member approval threshold revised from 90% of total shares to 75% of shares held by members present and voting. Creditor approval similarly brought down to three-fourths in value aligning fast-track mergers with Section 230 thresholds and making execution meaningfully simpler.
3. Conversion of Trust into LLP – AIF Restructuring Enabled A new Section 57A in the LLP Act, read with the proposed Fifth Schedule, now allows a specified trust to convert into an LLP. This is particularly significant for Alternative Investment Funds currently structured as trusts. They can now convert into LLPs, subject to consent of three-fourths of investors and compliance with the conversion procedure. Upon registration, the trust is deemed dissolved and all assets, liabilities, and contracts vest in the LLP by operation of law.
4. Recognition of SARs, RSUs and Other Equity-Linked Instruments – The Companies Act now formally recognises instruments linked to the value of share capital such as Stock Appreciation Rights (SARs) and Restricted Stock Units (RSUs), in addition to ESOPs. Amendments to Sections 42, 62, and 68 allow such instruments to be issued with shareholder approval and treated at par with ESOPs for purposes of private placement, further issue of capital, and buy-back provisions. This is a significant step in aligning Indian corporate law with global executive compensation practices.
5. IBC Liquidation and Company Law Schemes- The Bill explicitly clarifies that a compromise or arrangement under the Companies Act cannot be pursued where liquidation under the IBC has commenced. This removes a grey area that has been a source of litigation.
6. New Section 233A – Legacy Treasury Stock A long-pending issue finally addressed. Companies holding shares in their own name or through a trust arising from pre-2013 mergers must dispose of such shares within 3 years of commencement. Failure triggers mandatory cancellation, treated as a reduction of share capital.
7. Small Company Threshold Doubled – The upper prescribed limit for paid-up share capital has been raised from INR 10 crore to INR 20 crore, and for turnover from INR 100 crore to INR 200 crore. This significantly expands the universe of companies that can access relaxations available to small companies including lesser penalties, reduced board meeting requirements, and now under this Bill, potential exemption from mandatory auditor appointment and CSR compliance. Relevant for deal structuring involving smaller entities.
8. Special NCLT Benches – The NCLT President can now constitute Special Benches for specific matters under the Companies Act and IBC which is a welcome step towards faster resolution of complex M&A and restructuring matters.
9. Compounding Threshold Raised – Regional Directors can now compound offences up to INR 1 crore (up from INR 25 lakh), reducing the NCLT’s workload on routine compliance defaults arising in M&A transactions.
10. IFSC – Significant Push for Fund Structuring – LLPs at GIFT City can now maintain books, contributions, and share capital in permitted foreign currency. Trust-based AIFs can convert into LLPs. These changes, taken together, meaningfully strengthen India’s position as a fund domiciliation destination and offer a genuine onshoring alternative to structures currently domiciled in Mauritius, Cayman Islands, or Singapore.

[1] Bill No. 85 of 2026