OPINION | Companies Act Amendments: A renewed push to ease doing business

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By Soumya De Mallik and Soyansu Dash, Prithviraj Chauhan

In a bid to enhance corporate governance, foster regulatory efficiency, and augment India’s appeal as a global investment hub, the government is preparing to introduce a comprehensive set of amendments to the Companies Act, 2013, (Act) during the upcoming winter session of Parliament.

These amendments form part of the government’s continuing effort to reduce transaction costs, streamline corporate processes, and promote innovation-led economic growth.

Streamlining mergers to incentivise corporate restructuring

One of the key proposals expands the scope of fast-track mergers under Section 233 of the Act, which currently applies only to small companies and mergers between a holding company and its wholly-owned subsidiary.

The current requirement, which is an approval by shareholders holding at least 90% of the total share capital, has often proved excessively stringent. The proposed change, based on the recommendations of the Company Law Committee Report 2022, would replace this with a modified twin test requiring approval by the majority of members present and voting at the meeting accounting for seventy-five per cent, in value of the shareholding of persons present and voting, and representing more than fifty per cent in value of the total number of shares of the company.

This would make merger approvals quicker and more predictable, thereby incentivizing corporate restructuring. At the same time, safeguards will be needed to ensure that minority shareholders are adequately protected and that proper oversight is maintained.

A digital-first regulatory framework

The amendments are also expected to advance the transition towards electronic communication and governance. While Section 20 of the Act already allows electronic service of documents, the government may consider making it mandatory for certain classes of companies.

Digital communication can save time and cost, but complete reliance on electronic modes is not practical given that not all shareholders have dematerialised securities or provided email addresses. Companies will therefore need to maintain hybrid systems — offering physical copies on request and ensuring robust cybersecurity safeguards to protect investor data.

Enabling e-adjudication

Another significant proposal concerns e-adjudication of offences under the Act. At present, the government cannot use electronic systems to impose fines or collect fees due to a restrictive explanation under Section 398 of the Act.

This is a barrier to introducing electronic adjudication and enforcement mechanisms. This restriction is inconsistent with national initiatives such as the “e-Courts Project”, which aims to make the judicial system more accessible through digital infrastructure. Removing this restriction would not eliminate physical options, as Section 400, and existing rules thereunder, already allow both physical and electronic procedures to co-exist.

Efficient electronic adjudication can help decongest the system, though there must be adequate oversight to ensure that justice and equity are not compromised in the process.

Faster restoration of struck-off companies

The government is also considering procedural reforms to address delays in restoring companies that have been struck off the register. Under Section 252, such restoration currently requires an application to the NCLT, often leading to long waiting periods.

The proposed change would allow applications filed within three years to be decided by the Regional Director, reserving NCLT intervention for older cases that require deeper judicial review. This simple change could make the process significantly faster and more efficient.

Recognition of multidisciplinary partnership firms

The proposal to recognise multidisciplinary partnership (MDP) firms, allowing professionals from law, accounting, company secretarial, and cost management disciplines to work together within a single partnership structure raises important policy and regulatory concerns.

While such structures were once considered innovative in certain jurisdictions, the concept of MDPs has largely become obsolete in mature regulatory environments. In the U.S., the Sarbanes–Oxley Act, 2002, effectively prohibits partnerships between lawyers and accountants due to inherent conflicts of interest between advocacy and audit functions, and the risk of compromising professional independence and client confidentiality.

There are similar challenges in the Indian legal system. Sections 29 and 33 of the Advocates Act, 1961, restrict the practice of law exclusively to enrolled advocates, and Rules 2 and 47 of the Bar Council of India Rules prohibit advocates from entering into partnerships or any arrangement for sharing of remuneration with non-advocates. These provisions collectively make it impermissible for lawyers to form partnerships with professionals from other domains.

Consequently, any attempt to include legal practice within an MDP structure would require amendments to the Advocates Act, 1961, as well as corresponding changes in the Bar Council of India’s regulatory framework. Without such harmonisation, the legal profession would necessarily remain outside the MDP framework, rendering the proposal both legally untenable and practically irrelevant.

Further, there is absence of parity between legal and accounting sectors in India. Domestic law firms are comparatively smaller and operate under stricter ethical constraints, while large multinational accounting firms dominate the consulting market. Allowing MDPs without first liberalizing and rationalising the regulation of law firms, including addressing the entry of foreign law firms and ensuring competitive parity, would expose Indian firms to unfair competition.

In this context, the proposal to recognize MDPs does not represent a forward-looking reform but rather the revival of an obsolete concept that has failed to find traction globally. Without addressing the underlying statutory, ethical, and market-level constraints, such a framework could distort the professional services ecosystem instead of strengthening it.

Moving towards a modern corporate framework

Cumulatively, these reforms aim to align India’s corporate framework with international standards. The success of these measures will hinge on the robustness of digital infrastructure, coordination among regulatory bodies, and safeguards against market concentration or compliance dilution.

If implemented with precision, and with the right checks and balances, along with the necessary digital infrastructure, these reforms could be a game changer in simplifying compliance, modernising governance, and strengthening India’s position as a competitive business destination.

The real challenge, however, will be in the execution of these reforms, and in ensuring that the process of digitization and deregulation upholds the basic tenets of transparency, fairness, and investor confidence.

Soumya De Mallik (Partner), Soyansu Dash (Associate), and Prithviraj Chauhan (Associate Partner)  are from HSA Advocates. Views are personal and do not represent the stand of this publication.