Corporate Quarterly Milestones (April-June 2026)

On 12 June 2026, the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026 were notified, liberalising investment in listed companies under Chapter V and Schedule III of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019.

Prior to the amendment, only Non-Resident Indians (NRI) and Overseas Citizens of India (OCI) could invest in listed securities under Schedule III without registering as Foreign Portfolio Investors (FPI). This option was subject to an individual limit of 5% and an aggregate limit of 10% of a listed company’s paid-up equity capital (extendable to 24% by special resolution of the investee company). Other foreign individuals could invest in listed Indian equities only through the FPI route, which was generally not a practical option for individual investors.

The amendment substantially broadens this framework by:

• Expanding eligibility: Any individual resident outside India may now purchase and sell equity instruments of listed Indian companies on a repatriation basis through a designated authorised dealer branch, without obtaining FPI registration.

• Increasing investment limits: The individual limit has been enhanced from 5% to below 10% of the investee company’s paid-up equity capital (on a fully diluted basis), while the aggregate limit has been increased to 24%.
• Introduction of breach mechanism: Where an individual’s holding exceeds the sub-10% threshold, the excess must be divested within five trading days from settlement of the triggering transaction. Failing this, the entire holding will be reclassified as foreign direct investment. No such mechanism had previously been prescribed for individuals investing in listed entities under Schedule III.
• Retaining existing safeguards: Prior government approval continues to be required for investments relating to ownership or control by entities or citizens of countries sharing a land border with India.

The amendment expands access to India’s listed securities market by enabling foreign individual investors, beyond NRIs and OCIs, to invest without the regulatory burden of FPI registration, while introducing clearer investment limits and compliance mechanisms.

On 25 May 2026, key provisions of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (IBC Amendment) came into force, introducing some of the most significant reforms to the Insolvency and Bankruptcy Code, 2016 (IBC) since its enactment. The amendments address several issues that had emerged through judicial interpretation and practical experience, while introducing new mechanisms aimed at improving the efficiency and predictability of insolvency resolution.

Some of the critical changes include:

• Creditor-initiated insolvency resolution process: A new creditor-driven, debtor-in-possession resolution framework has been introduced as Chapter IV-A. Eligible corporate debtors (to be notified) may undergo a 150-day resolution process during which the existing management continues to operate the business under the supervision of a resolution professional. The process requires approval of at least 51% in value of eligible financial creditors and automatically converts into a regular corporate insolvency resolution process (CIRP) if no resolution plan is approved within the prescribed timeline of 150 days.

• Guarantor assets brought with the resolution process: Newly inserted Section 28A allows assets of a guarantor that have already been taken over by a secured creditor to be transferred as part of the corporate debtor’s insolvency resolution process, subject to the prior approval of the Committee of Creditors (CoC). The proceeds from such transfer are adjusted against the guarantor’s liability, with any surplus being returned to the guarantor. The amendment enables guarantor assets to be monetised as part of the resolution process, potentially improving value realisation for creditors.
• Statutory dues no longer treated as security interests: The amendment clarifies that a “security interest” arises only through an agreement or consensual arrangement and not by operation of law. Consequently, government dues, even where supported by a statutory charge, will rank as statutory dues in the liquidation waterfall under Section 53 rather than as secured debt. This effectively restores the priority of secured financial creditors over statutory claims and resolves the uncertainty created by the Supreme Court’s decision in State Tax Officer v Rainbow Papers Ltd.,¹ where the Court treated statutory charges as security interests.
• Clean slate principle codified: Newly inserted Section 31(6) codifies the ‘clean slate’ principle by clarifying that approval of a resolution plan extinguishes all past/pre-resolution claims against the corporate debtor, and bar any fresh or continuing proceedings in respect of such liabilities. While claims against guarantors and promoters remain unaffected, guarantors’ rights of subrogation against the corporate debtor have been extinguished. This provides resolution applicants with certainty that the acquired business comes free of legacy claims.
• Withdrawal of CIRP confined to an early stage: The substituted Section 12A restricts withdrawal of an admitted insolvency application to the period after constitution of the CoC but before the first invitation for resolution plans is issued, while retaining the requirement of 90% CoC approval. The amendment seeks to prevent promoters from settling after the resolution process has substantially progressed.
• Resolution plans for specific assets: The definition of “resolution plan” has been expanded to permit separate resolution plans for different assets of the corporate debtor. This allows multiple resolution applicants to acquire different businesses or assets of the same corporate debtor, providing greater flexibility than a single enterprise-wide resolution.

Following its consultation papers issued on 2 April 2026 and 8 May 2026, the Securities and Exchange Board of India (SEBI) amended the SEBI (Buy-Back of Securities) Regulations, 2018 to re-introduce open market buy-backs through the stock exchange route with effect from 1 August 2026. The move reverses a 2023 amendment to phase out this route, leaving tender offers as the only practical mechanism for listed companies to undertake buy-backs.

The stock exchange route had been withdrawn primarily because it did not provide all shareholders an equal opportunity to participate in a buy-back and, under the then prevailing tax regime, only shareholders whose trades were matched with the company’s buy orders benefited from the tax exemption available on buy-back proceeds. These concerns have since been substantially addressed by changes to the tax framework. Company-level buy-back tax has been abolished, and buy-back proceeds are now taxed in the hands of shareholders as capital gains, aligning their tax treatment with ordinary market transactions.

The amended framework restores the stock exchange route, subject to several safeguards:

• Normal trading treatment: Since the shareholder tax exemption and with it the need to identify which shareholders sold to the company has gone, buy-backs will be executed as ordinary trades at prevailing market prices, without a separate buy-back window or disclosure of the company’s identity as purchaser.
• Restrictions on promoters: Promoters and the promoter group will not be permitted to participate in buy-backs through the stock exchange route, although they can continue to participate through the tender offers. Their holdings will remain frozen during the buy-back period to prevent misuse of unpublished price-sensitive information.
• Enhanced compliance requirements: Companies must specify the maximum buy-back size, use at least 40% of the proposed amount earmarked for buy-back by the company, within the first half of the buy-back period, complete the buy-back within 66 working days, comply with minimum public shareholding requirements, and observe the revised cooling-off period of one year between successive buy-backs.

The revised framework reinstates an additional avenue for listed companies to undertake buy-backs, with tax parity resolving the concerns that led to its withdrawal. For investors, the framework revives on-market exit and liquidity opportunities, although sponsors classified as promoters remain excluded and must sequence their exits either prior to or after the buy-back period.