The Companies (Amendment) Act 2025, which received Presidential assent and was notified for effect from 1 September 2025, represents the most significant revision to the Companies Act 2013 since the 2019 amendment cycle. The changes span director accountability, audit committee composition, and related party transaction governance — three areas that corporate boards in Delhi NCR have been managing under increasingly scrutinised regulatory expectations. Companies that have not yet updated their board charters, committee terms of reference, and RPT approval frameworks are in technical non-compliance.
Director Appointment and Accountability Changes
The Amendment revises Section 149 to introduce a mandatory skills matrix disclosure requirement for all public companies and listed entities. Boards must annually publish a matrix mapping each director's expertise against the company's strategic needs, disclosed in the Board's Report and on the company's website. This obligation applies to independent directors as well as executive directors. Boards that have historically appointed directors on relationship rather than competence grounds will find this requirement creates reputational and legal exposure.
Section 164 — which sets out disqualifications for director appointment — has been amended to expand the category of convictions that disqualify an individual, now capturing offences under the Prevention of Money Laundering Act 2002, the Foreign Exchange Management Act 1999, and the Insolvency and Bankruptcy Code 2016. Companies must conduct enhanced due diligence before fresh director appointments and at the time of annual disclosures under Section 184.
The Amendment also introduces a new requirement under a revised Section 168: a director who resigns citing governance concerns must file a detailed disclosure with the MCA within 30 days, and the company's Board must acknowledge the disclosure in the next Board's Report. This provision is designed to surface board-level dissent and prevent quiet exits by non-executive directors when governance failings occur.
Audit Committee Obligations
Sections 177 has been amended to require all companies to which audit committee provisions apply — public companies with paid-up capital above Rs 10 crore and companies with turnover above Rs 100 crore — to ensure that the audit committee includes at least one member with a financial qualification, specifically a chartered accountant, cost accountant, or company secretary with post-qualification experience of not less than five years. Committees that do not currently meet this composition requirement must reconstitute by the next AGM season.
The scope of mandatory audit committee review has been expanded to include: related party transactions above revised thresholds (discussed below), all material modifications to existing RPTs, any transaction with a director's relative that meets a de minimis threshold of Rs 5 lakh, and any whistleblower complaints received during the quarter. The committee must report its findings to the full Board at each quarterly meeting. Minutes of audit committee meetings reviewing RPTs must now be maintained separately and made available for inspection by the statutory auditor.
Related Party Transaction Thresholds
The Amendment revises the RPT approval thresholds under Section 188 for the first time since 2014. Transactions with related parties that individually or in aggregate exceed 5% of annual turnover (reduced from 10%) now require ordinary resolution approval. Transactions exceeding 10% of annual turnover require special resolution. These lowered thresholds bring a broader class of commercial arrangements — including common procurement agreements, shared services contracts, and intra-group loans — within the shareholder approval requirement. Listed companies must additionally comply with SEBI LODR requirements, which impose separate and in some respects more stringent RPT standards.
The concept of "omnibus approval" for RPTs — introduced via SEBI regulation and now codified for all companies — has been standardised. Omnibus approvals must specify the parties, nature of transactions, maximum aggregate value, and conditions. Blanket omnibus approvals without value limits are no longer valid.
Other Significant Changes
The Amendment introduces a revised penalty regime for late filing of annual returns and financial statements, with graduated penalties that increase for repeat defaults. The compounding mechanism under Section 441 has been restricted: certain offences — including repeated RPT approval failures and director disqualification breaches — can no longer be compounded and must be adjudicated. The MCA has simultaneously indicated that the National Company Law Tribunal (NCLT) benches will be expanded to handle adjudication volumes, though timeline for bench additions is not confirmed.
Action Items for Delhi NCR Businesses
- Review current board composition against the skills matrix requirement and identify gaps before the next Board's Report cycle.
- Audit audit committee membership to confirm the mandatory financial qualification requirement is met; reconstitute before the next AGM if not.
- Recalculate your RPT thresholds based on the revised 5% and 10% of turnover tests and map all existing related party arrangements.
- Update omnibus RPT approval resolutions passed before 1 September 2025 to include specific value caps and conditions.
- Amend the audit committee terms of reference to include the expanded mandatory review scope.
- Conduct a Section 164 disqualification check on all existing directors, covering PMLA, FEMA, and IBC convictions.