[India Entry Guide] India's company incorporation rules are changing on three tracks — separating what is 'final' from what is still a 'draft' as of November 2026

Hello, this is Adullam Consulting.

"We plan to set up an Indian company this year, but we hear the Companies Act is changing. Wouldn't it be better to incorporate after the changes?" This is a question we receive often these days. The reason is that in 2026 a series of major amendments has been proposed under the Companies Act, 2013 and the Foreign Exchange Management Act (FEMA).

The difficulty is that these amendments are at different stages. Some are already in force, some are bills pending in Parliament, and some are drafts for which only the public consultation has closed. If you act on headlines alone, you may end up preparing documents to fit rules that have no legal effect yet.

Today, as of November 11, 2026, I will organize the amendments related to company incorporation into what is final and what is still a draft.

1. Three tracks of amendment: where things stand now

The rules affecting company incorporation fall broadly into three layers: the registration procedure (MCA rules), the company's governance and obligations (the Companies Act itself), and the way foreign capital comes in (FEMA). In 2026, amendments are under way in all three layers.

As the table shows, only the last row is already in effect. For the other three, the final wording and the effective date have not yet been set.

2. Draft amendment to the incorporation rules: the forms will change, but it is still a draft

On April 8, 2026, the MCA (Ministry of Corporate Affairs) issued a notice and explanatory material and published a draft amending the Companies (Incorporation) Rules, 2014. Its aim is to simplify incorporation filings and reduce paperwork, and it consolidates several existing forms into new ones.

The draft itself has no legal effect. It takes effect only once the final notification is published in the Official Gazette, and the new forms can be used only once they actually go live on the MCA portal. The MCA may also revise the content after the consultation closes. According to local practitioners' commentary, no final notification had been confirmed as of early November, and no effective date has been announced. For now, therefore, incorporation proceeds under the 2014 rules and the current forms.

3. The Companies Act amendment bill: the higher small company thresholds stand out

The Corporate Laws (Amendment) Bill, 2026 was introduced in the Lok Sabha on March 23, 2026 and referred to a Joint Parliamentary Committee (JPC), which submitted its report on August 3. Passage by Parliament and the commencement notification are still pending. The provisions most relevant to incorporation and operations are as follows.

• Small company ceilings: a proposal to raise paid-up capital from ₹10 crore to ₹20 crore and turnover from ₹100 crore to ₹200 crore
• Exemption from auditor appointment for certain classes of companies: the JPC recommended limiting this to private companies
• Reduced compliance burden for one person companies (OPCs), small companies and startups
• LLPs: a new Section 33A applying the registered valuer framework to LLPs, and conversion of certain offences from criminal penalties to civil monetary penalties

Even if the small company thresholds are raised, not every Indian subsidiary will benefit. The current definition of a small company in the Companies Act contains a proviso excluding holding companies, subsidiary companies and others, so a Private Limited company that is a subsidiary of a Korean parent may not qualify even if it falls within the monetary limits. Please check with a local Company Secretary (CS) or chartered accountant how the final law will treat this point and how it would apply to your structure.

4. Draft FEMA foreign investment rules: the framework for reporting rules changes

On July 21, 2026, the RBI (Reserve Bank of India) published the draft FEMA (Foreign Investment) Rules, 2026 and accepted comments until August 31. Once finally notified, they will replace the NDI Rules in use since 2019 in their entirety. The final rules take effect from the date the Ministry of Finance notifies them in the Gazette. As far as we have been able to confirm, no final notification had been issued as of November 11.

• The 10% threshold for treating an investment as FDI is retained, but the calculation method has been rewritten in more precise terms.
• Companies, LLPs, partnership firms and others are expressly listed as entities eligible to receive investment.
• Roles are divided so that the RBI handles remittance, reporting and operational procedures, while the DPIIT (Department for Promotion of Industry and Internal Trade) handles policy such as sectoral equity caps, prohibited sectors and government approval.
• The concept of Indian companies and LLPs owned or controlled by foreigners (foreign-controlled entities, FCEs) is restated, which may change the criteria for assessing an Indian subsidiary's downstream investment within India.

5. A change already in force: export proceeds realized within 9 months

Unlike the drafts, the amendment to the FEMA export and import regulations (Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026) has been in force since October 1, 2026. The period for realizing export proceeds has been shortened from 15 months to 9 months. If your Indian subsidiary exports goods or services to the Korean parent or group affiliates, the settlement cycle for intra-group receivables needs to be aligned with this period.

The amended regulations contain transitional provisions for transactions before October 1, 2026. Please first confirm with your foreign exchange bank (Authorised Dealer) which period applies to each transaction. The drafts above may also change upon final notification, so please treat this article as information as of November 11, 2026.

6. What changes for Korean companies

First, there is little reason to delay incorporation because of the amendments. The published drafts and bill generally aim to reduce procedures. A company incorporated under the current rules can simply follow the new forms and procedures from the point the new rules take effect.

Second, do not calculate costs on the assumption that the amendments will pass when choosing an entity type. When comparing a Private Limited company with an LLP, it is too early to assume that "once the law changes, we will be a small company and the audit and board burden will fall." It is safer to calculate on the basis of the current law.

Third, finance and legal teams at the Korean head office should keep in mind that the applicable rules divide at the notification date. If transactions such as remitting initial share capital, capital increases, share transfers or the Indian subsidiary's downstream investment within India straddle the notification date of the foreign investment rules, you should settle in advance which rules will govern the reporting.

1. Plan your incorporation timeline under the current rules.Prepare under the Companies (Incorporation) Rules, 2014 and the current MCA forms, and switch only the remaining steps to the new forms once the final notification is issued.
2. First confirm under current law whether you qualify as a small company.Check the capital and turnover thresholds together with the subsidiary exclusion proviso, and budget audit and board costs on the current basis.
3. Manage remittance and capital increase schedules alongside the notification of the foreign investment rules.Monitor RBI and Ministry of Finance Gazette notices, and for transactions straddling the notification date, decide the applicable rules and reporting method in advance.
4. Align intra-group export receivable rules with the 9-month period.Review both the settlement terms for proceeds from the subsidiary's exports to the parent and the payment terms in transfer pricing agreements.
5. Review the progress of the amendments every quarter.Regularly check MCA notices, the progress of bills in Parliament and RBI press releases, and confirm with a local chartered accountant or lawyer before actually applying any change.

Frequently asked questions

Closing

India's company incorporation rules are changing on three tracks in 2026, but as of November 11 the incorporation procedure itself remains under the current rules. Separate what is final from what is a draft, and start with what needs to be reflected immediately, such as the export proceeds realization period already in force. Adullam Incorporation handles incorporation in line with the current rules and, when amendment notifications are issued, sets out what changes for your company.

Adullam Consulting is here to help.

Sources: Ministry of Corporate Affairs on X: "The Ministry of Corporate Affairs (MCA) has issued a public notice and explanatory note dated 8th April, 2026 regarding a draft notification titled “Companies (Incorporation) Amendment Rules, 2026”, proposing amendments to the existing Companies (Incorporation) R · The Corporate Laws (Amendment) Bill, 2026 · RBI's Draft FEMA Foreign Investment Rules, 2026: What Changes for Foreign Investors in India · RBI Proposes Overhaul Of Foreign Investment Rules, Seeks Public Comments - BW Businessworld · Draft Foreign Investment Rules 2026: What Boards and Company Secretaries Need to Know · India Updates FEMA Export-Import Rules: RBI Changes Now in Effect