Government Implements Major Reforms to Ease Corporate Compliance
The Ministry of Corporate Affairs has unveiled a series of significant reforms aimed at reducing compliance burdens on businesses in India. These measures, designed to streamline processes and enhance ease of doing business, highlight the government’s commitment to fostering a more favorable environment for corporations.
In a major move toward decriminalization, the Ministry has reformed the Companies Act in two stages, in 2018 and 2020, decriminalizing a total of 51 offences. Further changes in the LLP (Amendment) Act of 2021 saw an additional 12 offences decriminalized, converting many into civil defaults subject to monetary penalties. This shift alleviates pressure on criminal courts and the National Company Law Tribunal, allowing for a more efficient judicial process.
Expanding Corporate Opportunities
As part of its efforts to support corporate growth, the scope for fast-track mergers was broadened in early 2021. This expansion now allows start-ups to merge with other start-ups and small companies. Further enhancements in 2025 will permit even more company classifications to utilize this expedited process, with a new “deemed approval” mechanism ensuring timely consent for these mergers.
Facilitating Capital Access
The Ministry has also allowed Indian public companies to directly list their securities in permissible foreign jurisdictions. This initiative aims to bolster “Brand India,” motivating growth in the technology sector and diversifying funding sources to attract a broader investor base.
This May, the Centre for Processing Accelerated Corporate Exit (C-PACE) was established to ease the process of striking off companies and LLPs from the Register. The Central Processing Centre (CPC) launched in February 2024 further centralizes the processing of various compliance forms, enhancing operational efficiency.
Raising Small Company Standards
On December 1, 2025, the classification criteria for small companies will be updated, raising the paid-capital threshold from Rs. 4 crores to Rs. 10 crores and the turnover limit from Rs. 40 crores to Rs. 100 crores. This amendment is poised to increase the number of companies categorized as small, subjecting them to fewer compliance requirements.
Increased Accessibility and User Support
In tandem with these reforms, the government has also rolled out Version 3 of MCA21 (MCA21 V3), designed to enhance ease of doing business and transparency. New functionalities include real-time validation during filings, a user-friendly dashboard for tracking submissions, and comprehensive support resources such as webinars and video tutorials.
To bolster governance, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, emphasizes transparency and accountability, requiring boards to code conduct for directors and conduct annual performance evaluations. With these ongoing initiatives and reforms, the Ministry of Corporate Affairs aims to transform the corporate landscape in India, fostering an environment conducive to business growth and operational efficiency.
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