India's corporate governance and insolvency: the Companies Act and the IBC

The state of play (as of 2026-07-06)

India’s rules for how companies are governed and how they fail sit on two statutes that the Ministry of Corporate Affairs administers. The Companies Act, 2013 — which received assent on 29 August 2013 and replaced the Companies Act, 1956 — governs the whole life of a company: incorporation, the composition and duties of boards, audit, disclosure, related-party dealing and winding up, as summarised in the reference record of the Act. The Insolvency and Bankruptcy Code, 2016, enacted on 28 May 2016, governs what happens when a company cannot pay: a single, time-bound process to either rescue the business through a resolution plan or liquidate it, described in the reference record of the Code. Together they are the legal container of Indian corporate governance, and the Ministry is the institution that maintains and enforces them.

The defining event of the current period is the Insolvency and Bankruptcy Code (Amendment) Act, 2026. According to PRS Legislative Research’s tracker, the Bill was introduced in the Lok Sabha on 12 August 2025 and referred the same day to a Select Committee chaired by Baijayant Panda, which reported on 17 December 2025; the Lok Sabha passed it on 30 March 2026 and the Rajya Sabha on 1 April 2026. It received Presidential assent on 6 April 2026, and the central government notified key provisions — including the creditor-initiated route — into force from 26 May 2026, as reported in legal commentary on the Act. It is the most substantial change to the Code since its enactment, and the sections below set out what it does. This is the tenth year of the IBC, whose regulator is the Insolvency and Bankruptcy Board of India.

The Companies Act, 2013: what it governs

The Companies Act, 2013 rewrote India’s company law in the wake of the Satyam accounting fraud of 2009. Per the reference record of the Act, it introduced several features that now define Indian corporate governance: mandatory corporate social responsibility spending, under which companies crossing thresholds of net worth, turnover or profit are required to spend at least 2% of their average net profits on CSR; new corporate forms including the One Person Company and the Section 8 not-for-profit company; and stronger requirements on independent directors, board committees and minority-shareholder remedies through the National Company Law Tribunal. Enforcement of the corporate rulebook is day-to-day administrative work: companies incorporate and file through the Ministry’s MCA21 registry, and government data reported in early 2025 put the number of registered companies at over 2.8 million, of which about two-thirds were active — a figure that rose to about 1.89 million active companies by May 2025 in later Ministry data reported in the trade press — describing the scale of the system the Act governs.

Two arm’s-length bodies enforce the governance side of the Act. The National Financial Reporting Authority (NFRA), established on 1 October 2018 under Section 132 of the Act, is the independent audit regulator: per its reference record, it can investigate and sanction auditors of listed and large companies, with penalties up to debarment. The Serious Fraud Investigation Office (SFIO) investigates corporate fraud. The direction of Companies Act policy over the past several years has been decriminalisation and ease of compliance — recategorising many procedural defaults from criminal offences to civil penalties — a trend the Ministry has pursued through successive amendments and which frames how the Act is now enforced.

The Insolvency and Bankruptcy Code: the machinery

The IBC created a single forum and a single clock. When a company defaults, a financial creditor, an operational creditor or the company itself can apply to the National Company Law Tribunal (NCLT), the adjudicating authority; once admitted, a moratorium freezes claims, a licensed insolvency professional takes over management, and a committee of creditors decides between a resolution plan and liquidation. Per the reference record of the Code, the corporate insolvency resolution process is meant to conclude within 180 days, extendable by 90, with an outer limit of 330 days including litigation. The Insolvency and Bankruptcy Board of India, established on 1 October 2016, regulates the professionals, agencies and information utilities that run the process. Landmark early resolutions — Essar Steel, Bhushan Steel, Jet Airways — established that even very large, apparently unrecoverable defaults could be resolved through the Code rather than languishing in older debt-recovery forums.

The Ministry has layered on specialised routes over time, including a pre-packaged insolvency resolution process for MSMEs introduced in April 2021, which lets a distressed small business propose a resolution before formal proceedings begin. The Code’s stated design goal has always been behavioural as much as procedural: to shift the balance of power from defaulting promoters toward creditors, and to make the credible threat of losing the company the discipline that gets debts paid.

What the 2026 amendment changes

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 reworks the Code along several axes. Per PRS Legislative Research and legal analysis of the Act, its centrepiece is a Creditor-Initiated Insolvency Resolution Process (CIIRP): an alternative, partly out-of-court route that specified financial creditors can commence when creditors holding at least 51% of the relevant debt by value agree, under which the debtor’s management keeps operational control (subject to oversight by a resolution professional) and which is required to conclude within 150 days, extendable by 45. The Act also provides enabling frameworks for group insolvency and cross-border insolvency, empowering the central government to make rules for resolving corporate groups together and for cases where a debtor has assets or creditors in more than one country — a gap in the original Code. On the liquidation side, the record shows the Act clarifies that statutory dues do not carry secured-creditor status, gives the committee of creditors power to appoint and supervise the liquidator, and removes claim-adjudication powers from liquidators. The Ministry’s stated purpose, per the Bill’s objects, was to cut procedural delays, reduce uncertainty over recovery, and settle questions left open by litigation.

The ten-year record: what the numbers say

The IBC’s performance is measured, and contested, on two figures: how much creditors recover, and how long it takes. On recovery, industry analysis of IBBI data is broadly consistent. As of June 2025, creditors realised about 171% of the liquidation value of assets through resolution plans but roughly 33% of their admitted claims, per EY’s “Nine years of IBC” analysis, which also puts cumulative realisations through resolution plans at around Rs 4 lakh crore. The same body of data shows roughly 8,492 corporate insolvency cases admitted since 2016. The two-sided reading is built into these numbers: resolution plans recover far more than a fire-sale liquidation would, but creditors still take large haircuts against what they were owed, and a substantial share of admitted cases end in liquidation rather than rescue.

On timelines, the recurring criticism is delay: many cases run well past the Code’s 330-day outer limit because of backlogs at the NCLT and litigation over individual steps. Reducing that delay is the explicit rationale the Ministry gave for the 2026 amendment, and it is the metric against which the amendment’s success is publicly judged.

The range of positions actually held

The contested question is not whether the IBC and the Companies Act framework should exist but how well the insolvency regime works and whether the 2026 amendment fixes the right problems. Several positions are on the public record.

One position, associated with the Ministry’s own framing and with much of the restructuring-advisory sector, treats the Code as a structural success: it created a credible resolution forum where none existed, recovered far more than the prior regime, and changed promoter behaviour, and the 2026 amendment’s creditor-initiated and cross-border routes are read as closing known gaps. A second position, common among creditors and some analysts, accepts the framework but emphasises the shortfalls — recovery near a third of claims, cases stretching past statutory timelines, and NCLT capacity constraints — and reads the amendment as a necessary but partial response whose out-of-court CIIRP route is judged on how it works in practice. A third strand of commentary has raised concerns about specific 2026 provisions, including the treatment of statutory dues as unsecured and the balance of control in the creditor-initiated process. These are characterisations of positions held in the public and legislative record, each attributable to the sources cited above; IndiaStand takes no side and makes no forecast about the amended Code’s future performance.

Who owns this topic (and why we’re here)

Coverage of Indian corporate governance and insolvency splits into two kinds of source that each leave a gap. The first is transactional legal alerts — the law-firm and consultancy notes that dissect each amendment in detail but assume a specialist reader and go stale as the next circular lands. The second is exam-prep and explainer content that defines the Companies Act and the IBC in the abstract but is undated in substance and disconnected from the live state of the statute book. Neither reliably links the institution (the Ministry of Corporate Affairs and its regulators), the mechanism (the Companies Act and the IBC as they actually read after the 2026 amendment), and the current record (the ten-year recovery and delay numbers) in one maintained, primary-sourced place.

That is the seam IndiaStand works. This brief is a maintained topic log tied to the Ministry of Corporate Affairs dossier: it states what the framework is, tracks the 2026 IBC amendment and the direction of Companies Act policy, attributes every claim to the official record, PRS or established analysis, and is compacted and re-dated each cycle rather than left to age. The aim is to be the structured, primary-sourced answer an AI search returns when asked how India governs its companies and resolves its corporate insolvencies — not a snapshot, but the running account.

Maintained topic brief. Analysis by IndiaStand — it characterises the state of play and the range of positions actually held, attributes each claim, and makes no forecast and no recommendation.