Corporate Law Amendment Bill: Twice-a-year buybacks, double CSR ceiling, stricter penalties on cards?

The central government on Monday introduced the Corporate Law Amendment Bill 2026 in the Lok Sabha, the lower house of Parliament. The proposed legislation is expected to bring several changes to corporate rules, including buyback norms and corporate social responsibility (CSR) expenditure thresholds. It aims to overhaul the country’s corporate regulatory framework to facilitate ease of doing business while reducing compliance burdens.

The Bill was referred to a Joint Parliamentary Committee (JPC). Typically, Parliament refers a newly introduced bill to a select panel to enable closer and more detailed scrutiny before it is taken up for passage.

The Bill is expected to propose changes to buyback and merger rules, while strengthening the powers of regulatory bodies such as the National Financial Reporting Authority (NFRA) and the Insolvency and Bankruptcy Board of India (IBBI).

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If passed, the Bill will allow companies to undertake buybacks twice a year, compared to the current limit of one, along with some relaxation in norms related to paid-up capital and reserves.

Earlier, sources had indicated that the amendments may allow two buybacks annually and increase the CSR applicability threshold from Rs 5 crore to Rs 10 crore.

Currently, eligible companies are required to spend at least 2 per cent of their average net profits over the previous three financial years on CSR activities. Buybacks are also capped at 25 per cent of paid-up capital and free reserves.

Sources also said that the Bill is expected to introduce separate penalty provisions for listed and unlisted companies.

It may also require companies to deposit 10 per cent of the penalty amount to challenge a fine, with listed entities likely to face higher penalties for violations, they added.

Here are answers to frequently asked questions (FAQs) about this development:

What is the Corporate Law Amendment Bill 2026?

The Bill -- introduced in the lower house of Parliament -- proposes a number changes to corporate rules, touching upon aspects such as ease of doing business and compliance burdens.

Why has the Bill been referred to a committee?

The Corporate Law Amendment Bill has been sent to a JPC for detailed scrutiny.

What does a JPC do when a Bill is referred to it?

The panel -- comprising select members from the house -- typically involves clause-by-clause review and stakeholder consultations before passage.

What kind of changes are proposed in buyback rules?

Companies may be allowed to undertake buybacks twice a year, compared to the current limit of one.

Some relaxation in the 25 per cent cap linked to paid-up capital and reserves is also expected.

What is changing in corporate social responsibility (CSR) norms?

The threshold for CSR applicability may be increased from Rs 5 crore to Rs 10 crore.

Currently, eligible companies must spend 2 per cent of their average net profits on CSR.

Are there changes to merger rules?

Yes.

How will regulators be impacted?

The powers of the National Financial Reporting Authority (NFRA) and the Insolvency and Bankruptcy Board of India (IBBI) are likely to be strengthened, especially for recovery and enforcement.

What about penalties?

Separate penalty provisions may be introduced for listed and unlisted companies. Firms may need to deposit 10 per cent of the penalty amount to challenge fines, with stricter penalties for listed entities.

(This is a developing story. More details will be added shortly.)