Volume #18 | IssueNo. 320/2026 | January 2026
Reflections
25 years of the 21st century behind us. As we begin the next 25 years, I thought it is a good time to reflect on the year that went by. From the lens of how I engaged with different audiences. Not a planned goal but speaking at different forums to varied kind of audiences just happened naturally over the last 12 months.
- Keynote speaker at the annual day of a professional association that was celebrating leadership change, along with family members of all age groups in a Tier 2 city: This required me to make my keynote address relevant not only to the association members but also to their parents and young children. Holding the attention of all was an exciting challenge. Alongside talking about leadership, I brought my personal vulnerability to the stage as well discussing my journey as a mother and cancer victor.
- Sharing my wellness lessons learnt the hard way with a bunch of highly accomplished professional women through an engaging panel discussion, I highlighted the need to strike a good balance between work, family and self without going on a guilt-trip.
- While on an hour-long podcast-interview for a Foundation mentoring youth from Tier2 and Tier3 cities about career options in commerce, I made sure I share my personal challenges in my initial student and career days of moving to a new city and entering a profession like Company Secretary with no role model or mentor to guide. I spoke their language and connected with their concerns even while shining the light on the great opportunities ahead.
- At the recently held interview on a FM radio channel in Kannada, I made efforts to learn the Kannada equivalents of certain professional terms and blend it well with English usage so that it did not look too pedagogic. Spotlight being on my entire journey as a professional and person, I brought in the human angle and was complimented for speaking honestly from the heart. A mere information bulletin could not have connected well!
- As a Guest of Honour at a Dance School’s anniversary celebrations, I wondered what am I going to say, given that I can’t even shake a leg. After seeing the breathtaking performances of students across age groups that went upto the 50s, I simply connected with the audience as a normal ‘rasika’ or connoisseur. My early childhood exposure to dance and music that has only deepened over the years helped me evaluate and appreciate every item presented. Both the artistes and the audience felt bonded.
- At live workshops in academic institutions and professional webinars that had audiences tune in from across the country, I experimented with encouraging my younger team members to prepare and present along with me. Together, for most parts, we turned it into an engaging fireside chat. My younger colleagues are now enthusiastic and raring to share on a larger stage.
- Last year I had the rare distinction of addressing all three professional institutes – ICAI, ICMA and ICSI. Invites from the sister institutes thrilled me but made me equally anxious – it was an unfamiliar audience in a webinar mode, and I wanted the title to be intriguing and interesting enough for them to tune in. In addition to presentation technique, I am glad I deliberated long enough on both the title and content that resulted in positive feedback from the organisers.
My learnings to make public speaking engagements audience-focussed:
- Know your audience
- Ask the right questions to the organisers – what is the purpose? what is the context? why me as a speaker? who is the audience?their age, language familiarity, cultural background, political preferences, professional experience, expectations? time available to speak?
- Prepare well and keep the flow flexible, natural, authentic and from the heart
- Speak with the audience (from their point of view), not to them – engage with them through different communication formats including conversation style (wherever possible)
- Speak about the audience and their lives – bond with them
- PIIE (heard it from a motivational speaker) – Persuade, Inspire, Inform, Entertain.
- Do whatever but make sure the audience is left asking for more. Less is more, always !!
I am sure our Hon’ble Finance Minister Smt. Nirmala Seetharaman and her team have undertaken a similar exercise to reflect on the promises made, current economy, challenges ahead and path towards Viksit Bharat 2047 to present a long-term, reform-oriented Budget 2026 which has a multi-sector impact. Do catch the highlights together with the regulatory changes effected by MCA, SEBI, RBI, IT, IBC etc. during January 2026 in this 320th issue of Samhita.
For any previous issues of Samhita and the readers’ feedback, please visit http://www.sharadasc.com/resource-center/.
India Budget -2026
As a growing economy with expanding trade and capital needs, the Union Budget 2026-27 focuses on accelerating and sustaining economic growth, building the capacity of the people and provide opportunities for meaningful participation of different communities. This would in turn help in achieving the vision of Sabka Sath, Sabka Vikas and Viksit Bharat. The emphasis of this Budget has been on Sectoral reforms, simplified Income Tax Rules and rationalization of penalties. To know more about the key highlights, click on the link below.
Regulatory Updates
MCA Updates
MCA vide notification dated December 31, 2025 has amended Rule 12A of Companies (Appointment and Qualification of Directors) Rules, 2014. The amended rule states that every individual holding DIN as on March 31 of a financial year is required to file KYC in Form No. DIR-3 KYC Web on or before 30th June of the immediately following every third consecutive financial year.
Further, every individual holding DIN shall in the event of change in particulars of Mobile number, email address or residential address, shall submit Form DIR 3 KYC Web within 30 days of such change.
The DIR 3 KYC and DIR 3 KYC WEB is substituted with Form No. DIR 3 KYC WEB.
These amendments replace the mandatory requirement of completing annual KYC before 30th September of every year while enabling filing for any change in particulars.
MCA vide notifications dated October 23, 2025 had established additional Registrar of Companies and Regional Directors along with territorial jurisdiction to exercise such powers and discharge such functions as specified under the Companies Act, 2013 as well as the LLP Act, 2008, with effect from January 01, 2026.
MCA vide notifications dated December 31, 2025 has revised the effective date from January 01, 2026 to February 16, 2026.
SEBI Updates
With an objective to strengthen corporate governance, enhance investor protection, and streamline compliance obligations for listed entities, particularly High Value Debt Listed Entities (HVDLEs), SEBI has made amendments to the LODR Regulations. These amendments are effective from January 20, 2026. Highlights of the amendments are as below:
Increased threshold for ‘High Value Debt Listed Entities’ (HVDLEs)
- Threshold for HVDLE classification raised from ₹1,000 crore to ₹5,000 crore.
- Entities that no longer meet the revised threshold are exempt from certain corporate governance provisions.
Governance & Board-related Revisions for HVDLEs
- Additional conditions added for appointment/re-appointment of directors, especially non-executive directors aged 75+.
- Time taken for regulatory approvals excluded from compliance timelines relating to board appointments.
- Vacancies in key board positions (including committees) to be filled within 3 months, especially where non-compliance may occur due to the vacancy
Strengthened Related Party Transaction (RPT) Framework for HVDLEs
- HVDLEs must follow Regulation 23 (RPT norms), except clauses 23(8) & 23(9).
- Transactions involving public sector entities or statutory payments exempted from RPT approval requirements.
- Definition of “holding company” clarified to mean listed holding company.
Compliance Reporting & Corporate Governance Updates
- Corporate Governance Compliance Report must be submitted periodically, in formats prescribed by SEBI.
- Clarifications inserted regarding meeting frequency, including minimum requirements per financial year.
Secretarial Audit Alignment
Format of Secretarial Audit report for every HVDLE and its material unlisted subsidiaries incorporated in India aligned with Regulation 24A.
Provisions for Companies Under Insolvency
- HVDLEs with approved resolution plans must fill CEO/MD/WTD/CFO vacancies within 3 months.
- Interim management must include at least one full‑time KMP.
Certain Restrictions Removed / Explanations Updated
- Omission of outdated explanations and sub-regulations across multiple sections (Regulations 15, 62C, 62D, 62M, 62N etc.).
- Updated clarifications on turnover-based criteria in Regulation 62L.
Mandatory Dematerialisation of Transfers & Service Requests
- All transfer requests must be processed only in dematerialised form
- Investor service requests (e.g., split, consolidation, duplicate certificates) must be completed within 30 days.
Investor Protection Enhancements
- Unclaimed escrow amounts to be transferred to IEPF under the Companies Act or, for non-company entities, to SEBI’s Investor Protection and Education Fund after 7 years from the maturity date of the non-convertible securities.
SEBI vide notification dated January 21, 2026 has amended the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. Highlights of the amendments are as follows:
- Introduction of a New Investor Category: Retail Individual Investor
A new clause 2(1)(gga) is inserted defining “retail individual investor” referring to an individual applying or bidding for debt securities up to ₹2 lakh - Issuers Allowed to Offer Incentives to Specific Investor Categories
A new proviso inserted in Regulation 31 which allows issuers to offer incentives (such as additional interest or discount to issue price) to certain categories:
- Senior citizens
- Women
- Serving & retired defence personnel
- Widows/widowers of defence personnel
- Retail individual investors
- Any other category specified by SEBI
- Incentives Only for Initial Allottees
- Incentives are available only for initial allotment
- No incentive applies if debt securities are transferred or transmitted after allotment
Others
National Financial Reporting Authority (NFRA) vide circular dated January 07, 2026 has issued a framework for effective communication between statutory auditors and those charged with governance, including audit committees. The circular is applicable to all listed companies, companies and bodies corporate covered in Rule 3 of NFRA Rules, 2018 and Auditors of all these companies. Apart from listed companies, following are the entities covered under Rule 3 of NFRA Rules, 2018:
i) unlisted public companies having paid-up capital of not less than Rs. 500 crores or having annual turnover of not less than Rs. 1000 crores or having, in aggregate, outstanding loans, debentures and deposits of not less than Rs. 500 crores as on the 31st March of immediately preceding financial year
ii) insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act
iii) any body corporate or company or person, or any class of bodies corporate or companies or persons, on a reference made to the Authority by the Central Government in public interest
iv) a body corporate incorporated or registered outside India, which is a subsidiary or associate company of any company or body corporate incorporated or registered in India including listed company and other companies as referred to in clauses above if the income or networth of such subsidiary or associate company exceeds 20% of the consolidated income or consolidated networth.
The Company Secretaries of applicable companies have been directed to place this Circular before the Board and Audit Committee.
The Circular reiterates the role of Board, Independent Directors, Audit Committee and Statutory Auditors in complying with the communication requirements under the Standards on Auditing.
Highlights of the Circular are as follows:
- Determining TWCG:
Though the Board is primarily responsible for governance, a sub-group of the Board, which could be the Audit Committee along with some of the Board members may be the TWCG. Auditor needs to determine TWCG at the start of the Audit. Once established there is an obligation to establish a robust two‑way communication with TWCG and auditors. - Auditors and Those Charged With Governance (TCWG) meet at least twice a year :
a) Once before commencement of audit to discuss scope, audit strategy, application of key risk areas and materiality.
b) Before approval of financial statements to discuss significant findings, control deficiencies, accounting estimates, unresolved concerns etc.
- All significant communications are expected to be in writing, including documentation of oral discussion
- Board to prepare and document an overall communication framework between TCWG and Auditors. The aspects to be included in the framework has been suggested in the circular which includes Objective and Purpose of the Two-way Communication, Name and details of Members of the Board and Audit Engagement Team, Policy and process for escalating matters to TCWG, frequency of meetings between TCWG, Auditors and expected Agenda matters etc.
- Certain matters shall invariably form part of the agenda matters for interactions between Auditors and TCWG namely, Audit Strategy and Audit Planning, Status of audit work and significant findings during the audit period and Auditor’s compliance with Independence and Code of Ethics.
The circular comes amidst NFRA’s observation of certain patterns in governance lapse, particularly on the audit front. The circular is to be seen in addition to the responsibilities cast under various statutes.
There were deliberations on whether Chairman of the Company will chair TCWG but in light of the spirit of the circular, the views are inclined towards having a separate Chairman of the TCWG itself, ensuring independence.
Though the circular does not expressly mention about applicability of this circular for limited review reports, it is being preferred as a good practice. Further, pre circulation of auditor’s presentation and mere bullet points not being sufficient has been emphasized along with minutization of meetings between the Audit committee and the Auditors.
RBI Updates
RBI vide notification dated January, 06, 2026 has notified the Foreign Exchange Management (Guarantees) Regulations, 2026 in supersession of Foreign Exchange Management (Guarantees) Regulations, 2000. The highlights of the new Regulations are as follows:
1. Definition of Guarantee, Principal Debtor and Surety has been added in the Regulations. It read as follows:
- “Guarantee” including a “counter-guarantee” means a contract, by whatever name called, to perform the promise, or discharge a debt, obligation or other liability (including a portfolio of debts, obligations or other liabilities), in case of default by the principal debtor
The erstwhile Regulations did not define the term Guarantee and also did not have reference to portfolio level guarantees.
- “Principal debtor” means a person in respect of whose default the guarantee is given;
- “Surety” means a person who gives a guarantee.
2. While the current Regulations reiterate the general prohibition on Indian residents entering into cross-border guarantee structures (principal debtor, surety or a creditor) except as permitted under the Regulations, it also provides for scenarios where these Regulations will not apply. Such exemption provisions, which were scattered in different circulars have now been codified in the Regulations. Exemptions from the Regulations include the following:
- a guarantee undertaken by a branch of an authorised dealer bank outside India or in an IFSC, unless any of the other parties to the guarantee is a person resident in India.
- an Irrevocable Payment Commitment (IPC) issued by an authorised dealer in its capacity of a custodian bank, where the principal debtor is a registered Foreign Portfolio Investor and the creditor is an authorised central counterparty in India.
- a guarantee given in accordance with the Foreign Exchange Management (Overseas Investment) Regulations, 2022.
3. Regulation 5 and 6 contain clear provisions for Persons Resident in India (PRII) to act as Surety/Principal Debtor or Creditor. The erstwhile Regulations did not focus on PRII providing guarantee as a Creditor to Person Resident Outside India. As per Regulation 6, a person resident in India being a creditor may arrange or obtain a guarantee in its favour, subject to the condition that where the principal debtor and surety both are persons resident outside India, the creditor shall ensure that the underlying transaction is not prohibited under the Act, or rules or regulations or directions issued under the Act.
4. The new Regulations formalizes the reporting requirements with the introduction of GRN form that shall be filed for a) issuance of guarantee, (b) any subsequent change in guarantee terms, namely – guarantee amount, extension of period or pre-closure, and (c) invocation of guarantee, if any. The onus of the reporting is as follows and shall be made to the AD Bank within 15 days from the end of respective quarter:
- by the surety where he is a person resident in India or
- by the principal debtor who has arranged the guarantee and where the surety is a person resident outside India or
- by the creditor where the surety and the principal debtor both are persons resident outside India or where the creditor has arranged the guarantee.
5. Late Submission Fee of INR 7500 + 0.025% x A x n, rounded upwards to the nearest hundred has been introduced through Regulation 8.
RBI vide notification dated January 13, 2026 has notified the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 in supersession of Foreign Exchange Management (Export of Goods & Services) Regulations, 2015. The new Regulations are effective from October 01, 2026. The new regulations provide a combined code for governing export and imports. Broad highlights of the new regulations include consolidation of various circulars into a single framework, bringing services under EDF Form from SOFTEX Form, differentiated timeline for realization of exports with special provision for Rupee invoices and tightened treatment for unrealized exports. To read more about the highlights, click on the link below.
(Open Highlights on FEMA (Export and Import of Goods and Services) Regulations, 2026)
(Open RBI notification dt January 13, 2026)
Vide advisory dated January 17, 2026 the Department of Commercial Taxes, Karnataka has advised for payment of Rs. 300/- per employee as Professional Tax from February in line with KTPTC & E (Amendment) Act, 2025 dated April 15, 2025.
ESG Updates
The Government of India has expanded the Carbon Credit Trading Scheme (CCTS) by notifying Greenhouse Gas Emission Intensity (GEI) targets for four additional carbon-intensive sectors namely, petroleum refineries, petrochemicals, textiles, and secondary aluminium. This brings 208 new obligated entities under the compliance mechanism of the Indian Carbon Market (ICM), taking the total coverage to 490 obligated entities across major emission-intensive industries. Earlier, in October 2025, GEI targets were notified for aluminium, cement, chlor-alkali, and pulp & paper sectors, covering 282 entities.
Notified in 2023, the CCTS provides the overall framework for pricing greenhouse gas emissions through a carbon credit trading mechanism aimed at reducing or avoiding emissions across the Indian economy. It operates through compliance and offset mechanisms, with obligated entities required to meet prescribed GEI targets under the compliance route. Entities exceeding their targets can earn and trade carbon credit certificates with those falling short.
The International Sustainability Standards Board (ISSB) has moved to ease one of the most contentious elements of climate reporting for financial institutions, rolling out targeted amendments to its IFRS S2 standard that narrow and clarify how financed emissions must be disclosed. The changes focus squarely on greenhouse gas reporting challenges that emerged as banks, insurers, and asset managers began applying the standard in practice. While IFRS S2 remains intact as a global framework for climate risk disclosure, the ISSB has acknowledged that some requirements, particularly around Scope 3 financed emissions, were proving difficult to operationalize at scale. Financial institutions, in particular, raised concerns about the breadth and complexity of Scope 3 category 15 emissions, which cover emissions linked to investments, lending, and other financing activities.
Pursuant to the consultations held to address those concerns, amended guidance has been issued as per which banks and other financial institutions may limit disclosures to emissions attributed to loans and investments they make directly. For asset managers, reporting may focus on emissions linked to assets under management. Beyond Scope 3 boundaries, the amendments introduce additional flexibility aimed at easing compliance without weakening comparability. It also addressed jurisdictional differences in emissions measurement. Companies may use Global Warming Potential values mandated by local regulators, even if those differ from the latest Intergovernmental Panel on Climate Change assessment. Similarly, where a jurisdiction requires a measurement approach other than the Greenhouse Gas Protocol, firms may apply that method under IFRS S2.
A new assessment by the Institute for Energy Economics and Financial Analysis (IEEFA) compares India’s Business Responsibility and Sustainability Reporting (BRSR) framework with the International Sustainability Standards Board (ISSB) standards, focusing on how well each supports climate transition planning. Using its own transition plan framework—grounded in the Transition Plan Taskforce (TPT)—IEEFA evaluates disclosures across four categories: Foundation, Governance, Implementation Strategy and Engagement Strategy. The analysis finds that ISSB provides more detailed, climate-specific requirements, including scenario analysis, governance accountability and financial impacts of transition strategies, while BRSR addresses these areas more broadly and does not mandate scenario analysis or climate-focused governance disclosures.
IEEFA concludes that ISSB offers clearer linkages between greenhouse gas targets, transition levers, risks and resilience, especially following its 2025 guidance on climate transition planning based on the TPT framework. BRSR, however, stands out for stronger indicators on social impact and stakeholder engagement but lacks the granularity needed to assess corporate readiness for climate transition. Overall, the study finds that neither framework alone delivers a complete picture of a company’s transition plan, underscoring the need for more consistent and integrated standards to help companies translate net-zero ambitions into credible, actionable strategies.
GST Update
GST Department has issued an advisory announcing key system enhancement to GSTR-3B filing, effective from the January 2026 tax period onwards. Key Changes:
- Revised Interest Calculation (Table 5.1)
The portal now auto-computes and auto-populates interest by giving credit for the minimum balance available in the Electronic Cash Ledger (ECL) from the return due date until the date of tax payment/offset.
Formula: Interest = (Net Tax Liability – Minimum Cash Balance in ECL from due date to debit date) × (Days delayed / 365) × Applicable Interest Rate.
The auto-populated interest is the minimum payable – it’s non-editable downward, but taxpayers can increase it via self-assessment if needed. - New Auto-Populated Tax Liability Breakup Table
A new table (in Table 6.1 – Payment of Tax section) will auto-populate details of supplies from earlier periods that are reported late via GSTR-1, GSTR-1A, or IFF.
Values are suggestive; taxpayers can modify them upward based on records. - Flexible Cross-Utilization of ITC
After exhausting available IGST credit, the portal allows more flexible use of CGST and SGST credits to pay IGST liability in any sequence/order (suggestive cross-utilization in Table 6.1).
Statutory Compliance Calendar
Quote of the day
“Life can only be understood backwards; but it must be lived forwards.” — Søren Kierkegaard
Disclaimer: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.