Source: IE
Context:
India has introduced the Corporate Laws (Amendment) Bill, 2026 to modernise corporate governance and improve the ease of doing business. The bill focuses on faster insolvency resolution, audit reforms, and compliance easing, and is linked with strengthening the Insolvency and Bankruptcy Code. It has been referred to a Joint Parliamentary Committee for further review.
What is NCLT?
The National Company Law Tribunal is a quasi-judicial body that handles corporate disputes and insolvency matters under the Companies Act and IBC. It currently faces capacity constraints, leading to delays in case resolution.
What is Insolvency Resolution?
It is a time-bound process to resolve stressed assets of companies under the Insolvency and Bankruptcy Code, aimed at value maximisation and revival of firms.
What is CSR (Corporate Social Responsibility)?
CSR refers to mandatory spending by companies on social and developmental activities. The proposed amendment increases the applicability threshold from ₹5 crore to ₹10 crore net profit, easing compliance for smaller firms.
What is NFRA?
The National Financial Reporting Authority regulates auditing and accounting standards in India. It oversees auditors and ensures transparency in financial reporting.
Key Proposed Amendments
- Special Benches of NCLT
Special benches can be constituted for faster disposal of cases, reducing backlog and improving efficiency. - Centralised Merger Approvals
A single NCLT bench will handle merger approvals to simplify and speed up the process. - CSR Threshold Relaxation
Threshold increased to ₹10 crore net profit to reduce compliance burden on smaller companies. - Audit Reforms
Auditors will be restricted from providing non-audit services during their tenure and for three years after, ensuring independence. - Buyback Flexibility
Companies will be allowed to undertake up to two share buybacks per year, improving capital management. - Strengthening NFRA
NFRA will be empowered to make regulations, enhancing audit oversight and accountability. - AIF Conversion
Trust-based Alternative Investment Funds (AIFs) can convert into LLPs for operational flexibility. - Virtual AGMs
Companies can conduct Annual General Meetings via video conferencing, improving compliance ease and participation.
MCQs
Q1. What is the primary function of the National Company Law Tribunal (NCLT)?
[1] Handling criminal cases
[2] Resolving corporate disputes and insolvency cases
[3] Managing taxation policies
[4] Regulating agriculture sector
[5] Supervising banking operations
Q2. In which year was the Insolvency and Bankruptcy Code enacted in India?
[1] 2010
[2] 2014
[3] 2016
[4] 2018
[5] 2020
Q3. What is the proposed CSR applicability threshold under the Corporate Laws (Amendment) Bill, 2026?
[1] ₹5 crore
[2] ₹7 crore
[3] ₹10 crore
[4] ₹15 crore
[5] ₹20 crore
Q4. What is the primary role of the National Financial Reporting Authority (NFRA)?
[1] Regulating banks
[2] Overseeing auditors and audit standards
[3] Managing fiscal policy
[4] Supervising stock exchanges
[5] Regulating insurance sector
Q5. What restriction is proposed under the audit reforms in the bill?
[1] Restriction on tax filings
[2] Ban on non-audit services by auditors
[3] Limit on bank lending
[4] Control on imports
[5] Restriction on exports
Answer Key
1 → [2]
2 → [3]
3 → [3]
4 → [2]
5 → [2]
