Companies Act Amendments 2025

October 28, 2025 by Team Instabizfilings

What is driving the changes in 2025

Before going into specific amendments, some of the motivations behind the changes:

Improving ease of doing business, reducing procedural delays (e.g. faster mergers/amalgamations).
Increasing transparency, governance, and accountability (expanded disclosures, audit forms, compliance).
Digitalisation of filings, forms, e-forms, and more strict timelines.
Strengthening ESG / Corporate Social Responsibility (CSR) / social & workplace obligations.
Rationalising layers of subsidiaries, reducing the complexity of corporate group structures.
Harmonising overseas companies/mergers / reverse mergers for startups & holding companies.

Key amendments/draft rules/proposals in 2025

Here are the major amendments or proposed changes to the Companies Act, 2013 (or its Rules) in 2025. Some are in force; some are in the draft stage.

Amendment / Rule	What changed/proposed	Effective date or draft status	Implications / Who is affected
Expansion of Fast-Track Merger Rules (Section 233) / Companies (Compromises, Arrangements and Amalgamations) (CAA) Rules, 2016	The MCA has proposed and notified amendments to widen eligibility for fast-track mergers. The draft rules propose allowing more classes of unlisted companies (excluding Section 8) with borrowings below ₹50 crore and no loan defaults, holding companies & subsidiaries (even if not wholly owned), fellow unlisted subsidiaries of the same group, etc.	Public consultation invited; rule amendments effective as per notification (some from Sept 8, 2025) for certain fast-track merger eligibility.	Corporations wanting to restructure/merge more smoothly will benefit; unlisted companies will have less need to approach NCLT, save time, cost. Need to satisfy additional auditor certificate, default history etc.
Companies (Accounts) Amendment Rules, 2025 – CSR Reporting & Form CSR-2 filing	Companies covered under Section 135 (CSR section) must now submit a separate Form CSR-2 to the ROC for FY 2023-24. Previously, CSR reporting was part of AOC-4 etc.; timing and filing deadlines shifted.	For FY 2023-24, filed before June 30, 2025, according to the amendment; for future years per notification.	Companies obligated for CSR will need to adjust internal reporting & compliance; stricter deadlines. Potential for penalties or non-acceptance if not properly filed.
Companies (Indian Accounting Standards) Amendment Rules, 2025 — Foreign Exchange / Currency Exchangeability Disclosures	More detail in accounting for foreign exchange rates; clarity on when a currency is considered “exchangeable”; additional disclosures if currency non-exchangeability affects performance or cash flows.	Effective per the notification issued May 7, 2025.	Companies with operations or transactions in foreign currencies will have to review disclosures, update accounting policies, and ensure these effects are reported properly.
Reporting & E-Filing / Director’s Report enhancements	From July 14, 2025, mandatory new disclosure norms in the Director’s Report: number of sexual harassment complaints received / resolved / pending over 90 days; maternity benefit compliance; more detailed disclosure of indebtedness, shareholding (including gender-based promoter details, FII holdings), photographs of registered office etc. Also e-forms updated/replaced, more machine-readable formats.	Effective from July 14, 2025 for companies subject to these rules.	All companies (especially listed / larger ones) must ensure internal reporting captures these items. Compliance teams must update their report templates. The ROC filings and e-forms need to be correctly filled.
Restriction on Number of Layers of Subsidiaries Amendment Rules, 2025	Limit on the number of subsidiary layers a company can have (except certain companies like banks, NBFCs, insurance, and government companies). Revised Form CRL-1, companies must file within 150 days if they exceed layers; penalties for non-compliance (fine up to ₹10,000 + ₹1,000 per day thereafter). No adding of more layers going forward.	These rules came into effect on July 14, 2025.	Corporate groups need to assess their current structures, possibly reorganise to reduce layers. Transaction costs for restructuring. Increased compliance. Affects group holding companies, layered subsidiaries.
Other changes	- Forms CRA-2 & CRA-4 (Cost audit related) revised; more fields/disclosures required.- Form GNL-1 (Registration Offices & Fees rules) revised: used for applications to ROC, compounding of offences, extensions etc.; now requires more detailed info and supporting documents.	Effective from July 14, 2025.	Companies must map what forms they use, ensure updated versions are used, and check supporting documentation readiness. ROC filings will require more detail; delays possible if submissions are incomplete.
Proposed/Under consideration	- Proposals to bolster ESG (Environmental, Social, Governance) objectives: embedding ESG in fiduciary duties of directors and creating oversight bodies. A parliamentary panel has asked the Ministry of Corporate Affairs (MCA) to amend Companies Act to enforce ESG rather than just voluntary reporting.- Further proposals in CSR regime, compliance enhancements, operational efficiency.	These are, as of now, recommendations / under consultation; timeline depends on government notification.	If enacted, it would require boards / directors to align strategies with ESG, possibly more disclosure / compliance costs; requires governance mechanisms; investor expectations will likely tighten.

Practical implications & compliance challenges

Internal system enhancements: Firms will have to get their compliance / secretarial / legal teams equipped with capturing new information (e.g. sexual harassment allegations, maternity benefit adherence, gendered promoter shareholding, etc.), see that forms record necessary details.
Form amendment & filings: Utilize proper updated e-forms (AOC-4, ADT-4, CRA-2, CRA-4, GNL-1, MGT-7, MGT-7A, MGT-15 etc.). Anything less can get rejected, attract penalties or cause delays.
Audit / Cost Audit: Enhanced scope and documentation, especially for cost auditors; revised regulations for CRA-2/CRA-4 mandate additional disclosures and board resolutions.
Review of corporate group structure: With the limitation of layers of subsidiaries, numerous groups will need to assess whether they cross permitted thresholds; reorganisation plans or limit additions.
Mergers / Amalgamations planning: The extended fast-track merger regime allows greater flexibility, but companies have to qualify (borrowing limits, auditor certifications, default history). Documents and timelines must fit.
Governance & Board responsibilities: With heightened disclosures and potential future ESG requirements, boards and directors will have greater fiduciary & compliance responsibilities. Improved governance, audit trail, and oversight committees will be required.
Penalties risk: Failure to comply with forms, delay, and non-disclosure will incur a penalty; further, more stringent ROC scrutiny.

What to watch out for / upcoming / areas of possible further amendment

ESG / Directors' Duties: As the parliamentary panel has suggested, the shift towards making ESG part of the mandatory (not voluntary) framework may result in amending Sections of director duties and liabilities. This, if implemented, could alter disclosure practices, board procedures, perhaps enforcement.
CSR regime tightening: Tightening of policies on CSR expenditure, disclosure, auditing of CSR initiatives; tough penalties or statutory impact reporting.
Increased digitalization & automation: More e-filing, real-time compliance, potential decrease in timelines, ROC / MCA process simplification.
Simplification of forms / easing of compliance burden: although numerous amendments enhance disclosure, pressure exists to offset this with ease of compliance.
Judicial / tribunal meanings: With new regulations, courts and NCLT / RDs will need to interpret thresholds (e.g., what is considered "loan default," "borrowing" thresholds, etc.) – likely litigation or clarification required.
International aspects: Problems such as reverse mergers, foreign holding corporations, cross-border mergers being tidily managed may be addressed with more elaborate rules.

Potential risks/challenges for companies

More compliance expenses (in terms of manpower & legal/secretarial overhead).
Reputation risk in case of delayed or lacking disclosures.
Risk of rejection of filings if forms are not completed correctly or required documents are absent.
For those with numerous layers of subsidiaries, restructuring may be costly and complicated.
For startups / small businesses, the weight might be greater unless exempted; must keep track of the scope of rules that they are subject to.

Summary / Key Takeaways

The regime under the Companies Act in 2025 is being revised to focus on transparency (greater disclosures), governance (board reporting, ESG expectations), and restructuring ease (fast-track mergers, simplified rules for merger/demerger).
Digitalisation & more comprehensive e-filings are becoming the norm; paper forms / older versions are being eliminated.
Subsidiary firms are subject to regulatory limitations (number of layers), and therefor,e companies must carefully plan group structures.
Future/pending propositions regarding ESG, CSR & directors' responsibilities will further support compliance and stakeholder expectations.

Disclaimer

The information provided in this blog is purely for general informational purposes only. While every effort has been made to ensure the accuracy, reliability and completeness of the content presented, we make no representations or warranties of any kind, express or implied, for the same.

We expressly disclaim any and all liability for any loss, damage or injury arising from or in connection with the use of or reliance on this information. This includes, but is not limited to, any direct, indirect, incidental, consequential or punitive damage.

Further, we reserve the right to make changes to the content at any time without prior notice. For specific advice tailored to your situation, we request you to get in touch with us.