Key Regulatory & Legal Updates in May 2026
- MCA
- MCA Clarification issue related to Transfer of Membership Interest in Company Without Capital
MCA has clarified vide its communication dated 08.05.2026 that transfer of membership interest in a company not having share capital (including companies limited by guarantee) must be effected through a duly executed instrument of transfer under Section 56 of the Companies Act, 2013.
Further, pursuant to Rule 11(2) of the Companies (Share Capital and Debentures) Rules, 2014, Form SH-4 shall be used for such transfer, with references to “securities” being read as references to the “interest of a member”.
Read More: https://www.mca.gov.in/
- CSR through Social Stock Exchange
Vide G.S.R. 416(E), Schedule VII of the Companies Act, 2013 has been amended to include subscription to Zero Coupon Zero Principal (ZCZP) Instruments listed on the Social Stock Exchange as an eligible CSR activity.
This provides companies with an additional avenue to deploy CSR funds towards social impact initiatives through a regulated market framework.
Read More: https://www.mca.gov.in/
- Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026
Vide G.S.R. 415(E), the Companies (CSR Policy) Rules, 2014 have been amended to allow companies to undertake CSR activities through Zero Coupon Zero Principal (ZCZP) Instruments issued by SEBI-registered NPOs listed on the Social Stock Exchange.
Key features include a 10% cap on annual CSR expenditure, exemption from impact assessment requirements, and mandatory utilization/reporting obligations for issuing NPOs.
Read More: https://www.mca.gov.in/
- FEMA / RBI
- Foreign Exchange Management (Authorised Persons) Regulations, 2026
The Reserve Bank of India has notified the Foreign Exchange Management (Authorised Persons) Regulations, 2026, introducing a revised regulatory framework for Authorised Persons under FEMA, 1999. The Regulations seek to strengthen regulatory oversight, streamline foreign exchange operations, and enhance compliance standards, while superseding certain existing circulars and making consequential amendments to related Master Directions.
Read More: https://www.rbi.org.in/
- Securities and Exchange Board of India (SEBI)
- Advisory on Emerging Advanced Artificial Intelligence (AI) Tools for Vulnerability Detection
SEBI, through its Circular dated 05 May 2026, has cautioned regulated entities regarding emerging Artificial Intelligence (AI)-based tools capable of identifying and exploiting cybersecurity vulnerabilities at scale. The advisory urges market participants to strengthen cybersecurity controls, vulnerability management frameworks, and AI governance mechanisms to enhance cyber resilience.
Read More: https://www.sebi.gov.in/
- Discontinuation of Investor Risk Reduction Access (IRRA) platform
SEBI has approved the discontinuation of the Investor Risk Reduction Access (IRRA) platform following the implementation of enhanced business continuity and disaster recovery mechanisms by Market Infrastructure Institutions (MIIs). Market participants should review and align their contingency and operational resilience frameworks with the revised regulatory arrangements.
Read More: https://www.sebi.gov.in/
- Master Circular on Surveillance of Securities Market
SEBI has issued an updated Master Circular on Surveillance of the Securities Market, consolidating existing surveillance-related circulars and compliance requirements into a single reference framework. The circular strengthens market monitoring mechanisms and reiterates compliance obligations for stock exchanges, depositories, intermediaries, and other regulated entities.
Read More: https://www.sebi.gov.in/