The Corporate Laws (Amendment) Bill, 2026: the Hidden Cost for M&A in India

Written by Siddhanth Nadkarni and Survepalli Prithvika, the authors are law students currently pursuing BA.LLB from National Law Institute University, Bhopal

I. Introduction: Reform in a Record Year

India recorded 2,756 M&A transactions in 2024, its busiest year on record. That figure represents not just commercial momentum but also the weight that the country's corporate restructuring framework is already bearing. Against this backdrop, the Corporate Laws (Amendment) Bill, 2026 (hereinafter "the Bill") was introduced in the Lok Sabha on 23rd March, 2026, as part of the Government of India's continuing effort to improve the ease of doing business. The Bill proposes an exhaustive set of amendments to the Companies Act, 2013, and the Limited Liability Partnership Act, 2008, with the stated objective of making India a globally preferred destination for investment, corporate restructuring, and capital formation. The Bill addresses a wide range of corporate law matters, including mergers and acquisitions (hereinafter "M&A"), compromises and arrangements, treasury shares, fast-track mergers (hereinafter "FTMs"), foreign currency accounting for entities operating in International Financial Services Centres (IFSCs), buy-back provisions, governance and compliance reforms, decriminalisation of certain procedural offences, and reduction of the burden on tribunals.

This two-part article is dedicated to scrutinizing specific clauses of the Bill, which carry the most significant consequences for India's M&A landscape, namely, clauses 67(a), 67(b), 69(a), 69(b), and 70. The first part discusses the proposed single NCLT bench jurisdiction for merger schemes and the proposed elimination of Section 230 compromises during IBC liquidation. The second part examines the liberalisation of FTMs and the introduction of proposed Section 233A, which mandates disposal of treasury shares arising from pre-2013 schemes. The central problem this article identifies is that the Bill, in its present form, conflates procedural efficiency with substantive reform. In doing so, it trades away minority protection, institutional oversight, and commercial flexibility, precisely the attributes that sophisticated M&A markets depend upon.

II. The Single NCLT Jurisdiction Proposal

Under the present framework, all companies participating in a compromise, arrangement, or amalgamation must independently approach the NCLT bench having territorial jurisdiction over their respective registered offices, filing applications under Sections 231 to 233 of the Companies Act. Both benches then conduct parallel proceedings involving notices, creditor meetings, shareholder approvals, hearings, and sanction orders. This results in duplication of pleadings, extended timelines, and the ever-present risk of divergent orders due to the differing temperaments of each NCLT bench. To address this, Clause 67(a)(ii) of the Bill proposes to amend Section 230(1) of the Companies Act, 2013, such that all applications relating to companies involved in a scheme would be filed before the NCLT bench having jurisdiction over the transferee or resultant company alone. The proposed consolidation has genuine merit since it remedies the above-mentioned pitfalls of the current framework for compromises and arrangements. However, two significant problems arise.

II(A). The Unresolved Stamp Duty Question

The Bill's single-bench proposal has been received in some quarters with the expectation that it would also centralise stamp duty exposure, however, that expectation is misplaced. Stamp duty on an NCLT order sanctioning a scheme under Sections 230 to 232 of the Companies Act continues to be governed by State Stamp Acts and arises based on the location of assets, registered offices, and state-specific charging provisions. A single sanction order does not alter this position. Multi-state schemes will continue to attract stamp duty in multiple jurisdictions, as confirmed by the Bombay High Court's judgment in Schaeffler India Limited v. Chief Controlling Revenue Authority, Pune. Accordingly, the amendment primarily reduces procedural fragmentation but does not reduce substantive stamp duty exposure. This is a meaningful limitation that practitioners and deal-makers must internalise before assuming the reform delivers cost savings beyond the procedural.

II(B). Restricted Access to Justice for Local Stakeholders

Under the current multi-bench framework, the 16 separate NCLT benches across India allow local creditors, minority shareholders, employees, and operational stakeholders of companies undergoing amalgamation to participate in proceedings before tribunals situated within their respective states. This localised dispute resolution is particularly significant in mergers involving companies across different jurisdictions in India.

Some may argue that videoconferencing and hybrid hearings could address this concern. However, the Hon'ble Supreme Court, in Sarvesh Mathur v. The Registrar General, High Court of Punjab and Haryana, observed that while High Courts have developed comprehensive videoconferencing infrastructure, the same cannot be said of many tribunals, including the NCLT. Under these circumstances, any practical impediment to in-person participation  before a distant bench would impede access to justice for local stakeholders. Non-participation, even if involuntary, increases the risk of post-merger litigation.

II(C). Congestion at Already Overburdened NCLT Benches

The consolidation of scheme applications before transferee-company benches will inevitably concentrate matters before the NCLT benches at Mumbai, Delhi, Bengaluru, and Ahmedabad, where major transferee entities are typically registered. These benches are already operating under severe strain. The Bengaluru bench, to take one example, failed to decide 72% of cases filed before 2021 as of 2023. The proposed reform, therefore, risks producing the precise opposite of its stated intent. Rather than reducing delays, single-bench jurisdiction may simply redistribute and deepen them by funneling additional caseloads into already congested benches.

III. Pulling the Plug on Section 230 Compromises During IBC Liquidation

Section 230 of the Companies Act, 2013, occupies a critical position within India's insolvency architecture. When the Corporate Insolvency Resolution Process (CIRP) fails and liquidation commences, Section 230 gives the liquidator a window to preserve business operations and maximise asset value through a negotiated compromise or arrangement, rather than forcing an immediate piecemeal sale of assets. It is, in effect, a last resort for going-concern preservation.Clause 67(b) of the Bill proposes to omit the words "or under the Insolvency and Bankruptcy Code, 2016, as the case may be" from Section 230(1) of the Companies Act, thereby removing the availability of Section 230 compromises during IBC liquidation proceedings.

The argument advanced in favour of this omission is that it would eliminate the longstanding jurisdictional overlap between the IBC and the Companies Act. However, this argument requires qualification. In Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. & Anr., the Hon'ble Supreme Court addressed the relationship between IBC liquidation and Section 230 schemes, holding that the ineligibility provisions under Section 29A of the IBC attach themselves to a scheme of compromise proposed under Section 230 when the company is undergoing IBC liquidation. This ruling resolved the specific mischief of ineligible promoters using Section 230 as a backdoor to regain control of companies they had driven into insolvency. What it did not do was declare Section 230 incompatible with IBC or render the overlap irreconcilable. The Court, in fact, acknowledged that Section 230 forms part of the broader settlement mechanism under IBC. The Bill, by eliminating Section 230 altogether from the liquidation context, goes considerably further than what the Supreme Court found necessary.

The practical consequences are significant. Foreign distressed asset investors, including asset reconstruction companies and private credit funds, often structure their entry into stressed assets through last-stage turnarounds involving negotiated arrangements. For instance, Edelweiss Asset Reconstruction often relies on compromises involving the acquisition of a majority stake in debt (i.e., debt-equity swaps) for restructuring operational assets of distressed companies. Such strategies depend on the availability of a compromise mechanism at the liquidation stage. Liquidation without Section 230 reduces the corporate debtor to the sum of its dismantled parts. For foreign strategic buyers, a functioning enterprise carries a premium that fractured machinery or impaired IP portfolios cannot replicate. Removing post-liquidation schemes forecloses this premium and narrows India's distressed asset market precisely when its depth is being tested.

IV. Fast-Track Mergers: Wider Access, Thinner Safeguards

The Bill proposes a significant liberalisation of FTMs, presently governed by Section 233 of the Companies Act, 2013. The expansion of eligibility to cover mergers between a holding company and its unlisted subsidiaries, between fellow subsidiaries, and across a broader class of unlisted companies is a substantive reform that will benefit private equity-backed restructurings, reverse flips, pre-IPO consolidations, and internal group reorganisations. However, the Bill pairs this expansion with a reduction in approval thresholds that introduces structural vulnerabilities for minority stakeholders.

IV(A). Reduction of Shareholder and Creditor Approval Thresholds

Clause 69(a) of the Bill proposes to reduce the shareholder approval threshold from 90% of total shares to 75% of the value held by members present and voting. The creditor approval requirement is simultaneously proposed to be reduced from nine-tenths in value to three-fourths in value. The shareholder threshold change operates as a mathematical double-whammy against minority shareholders. It alters both the percentage required and the base from which that percentage is calculated. Under the current law, an FTM requires approval from shareholders holding 90% of the total outstanding shares. If a company has 100 shares, the majority must secure exactly 90 favourable votes. If minority shareholders holding 11 shares simply abstain, the scheme fails. The burden is on the majority to secure active consent. Under the proposed framework, if only 60 shares are represented at the meeting because retail investors are either apathetic or disengaged, the new 75% threshold is calculated against 60, not 100. The majority now needs only 45 votes to pass the restructuring. A small, highly organised group of shareholders can push through a merger, demerger, or other restructuring without broader consensus from the overall shareholder base.

This concern is not novel to the authors. The Company Law Committee, in its report dated March 21, 2022, had anticipated exactly this problem and proposed a twin test: approval from 75% of shareholders present and voting, combined with approval from more than 50% in value of the total shareholders of the company. The second leg was expressly recommended to protect the interests of minority shareholders. The Bill adopts the first leg and discards the second. In doing so, it removes the safeguard that gave the threshold reduction its legitimacy.Similarly, reducing the creditor approval threshold from nine-tenths to three-fourths weakens creditor collective bargaining materially. Under the current framework, a creditor or creditor group holding just over 10% of the debt value can block a restructuring, compelling the company to address their concerns or improve terms. Under the Bill, that same group is effectively silenced. One now needs to hold over 25% of the debt value to block a proposal, a coordination threshold that is considerably harder for smaller or mid-sized creditors to achieve. The practical result is that the negotiating table shrinks.

IV(B). Removing the Official Liquidator: Eliminating a Statutory Second Opinion

Clause 69(b) of the Bill proposes to remove the requirement of filing with the Official Liquidator (hereinafter "OL") in cases involving demergers or transfer of undertakings, on the basis that the OL contributed to delays in processing applications and issuing confirmation orders. The OL's role, however, is not a procedural formality. Under Section 233 of the Companies Act, 2013, and Rule 25(6) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, the Regional Director may issue a confirmation order for an FTM only if the OL's report raises no objection to the scheme. The OL is required to examine the scheme in terms of Section 232 and certify that the affairs of the company have not been conducted in a manner prejudicial to the interests of its members or to public interest. Removing this requirement eliminates the only statutory second opinion that independently verifies whether the transferor company is being used as a vehicle for fraud, asset-stripping, or other prejudicial conduct before it is dissolved into the transferee. That this opinion is sometimes slow to arrive does not diminish its purpose. The answer to delay in an oversight function is not to abolish oversight; it is to build institutional capacity.

V. Treasury Shares and the Section 233A Mandate: Trading Flexibility for Finality

Clause 70 of the Bill proposes to introduce Section 233A, which mandates the disposal of treasury shares arising from pre-2013 compromise or arrangement schemes. Treasury shares refer to the portion of a company's previously issued shares that it has repurchased from the open market and holds in its own treasury. Under the proposal, where a transferee company holds shares in its own name, or through trusts acting on behalf of subsidiaries or associates, such shares must be disposed of within three years from the amendment's commencement. Failure to comply would result in deemed cancellation and automatic reduction of share capital, along with a continuing penalty of Rs. 10,000 per day.

Treasury shares, in the M&A context, have historically functioned as a non-dilutive currency for acquisitions. Several major Indian conglomerates have used treasury stock in group mergers, including the merger of Reliance Petroleum into Reliance Industries and restructurings involving Mahindra and Mahindra, BPCL, IOC, and United Spirits. More recently, EaseMyTrip deployed treasury shares in its acquisition of three companies in 2024. The mechanism is widely used internationally as well; Toyota's plan to make Misawa Homes a wholly owned subsidiary offers a comparable overseas illustration.

The commercial logic behind treasury shares as acquisition currency is that they allow companies to complete significant transactions without depleting cash reserves, preserving liquidity for research, operations, and capital expenditure. Critically, share-for-share swaps using treasury stock do not increase the total share count, since these shares are already accounted for within the company's authorised capital. New share issuances, by contrast, increase the float and dilute earnings per share, lowering the company's valuation during a takeover. The Bill, by mandating disposal of the pre-2013 treasury stock pool, forces future acquirers either to deploy cash or to issue new equity, both of which carry costs that treasury-funded swaps do not. This is not a minor inconvenience for conglomerates with complex group structures; it is a structural change in how large-scale M&A in India is financed.

VI. Conclusion

The Corporate Laws (Amendment) Bill, 2026, is a well-intentioned attempt to address genuine challenges in India's M&A framework, including NCLT delays, cumbersome multi-bench proceedings, high approval thresholds for group restructurings, and the absence of a comprehensive treasury share regime under the Companies Act. The principal concern, however, lies in the manner in which these objectives are pursued.

While the proposed reforms simplify procedural requirements, they also raise important questions about whether sufficient safeguards have been retained. Single-bench jurisdiction may streamline filings, but it does not address stamp duty implications, may affect access to justice for geographically distant stakeholders, and could further increase the burden on NCLT benches that are already stretched thin. Similarly, the removal of Section 230 compromises during IBC liquidation eliminates a mechanism that has facilitated going-concern sales for the benefit of creditors and employees. The proposed reduction of FTM approval thresholds, without incorporating the Company Law Committee's recommended dual-threshold safeguard, may reduce minority shareholder protection. Likewise, dispensing with the Official Liquidator's scrutiny removes an additional layer of oversight, while the mandatory cancellation of treasury shares under Section 233A limits the use of a legitimate financing mechanism without providing an alternative framework.

The success of these reforms will ultimately depend on striking a balance between procedural efficiency and stakeholder protection. Afterall, as India continues to position herself as a preferred destination for M&A, the real test will be whether the reworked processes related to corporate restructuring are seen by courts, creditors, and investors alike, as both faster and reliably fair in their application. The authors sincerely hope that the critiques in this article are not met with legislative inaction, in the best interests of the M&A landscape of the country.