Prashant Mara
BTG Advaya, Mumbai
prashant.mara@btgadvaya.com

Introduction

For decades, white-collar crime enforcement in India focused mainly on the demand side of corruption, ie, public sector workers taking bribes. Private enterprises and their management largely escaped scrutiny, shielded by layered corporate structures, vague statutory language and the high evidentiary bar for proving direct abetment.

That picture has changed. A series of recent statutory overhauls and assertive court rulings has turned this dynamic on its head. The enforcement net has now widened to include the ‘supply side’ and in order to catch the ‘enablers’ of illicit financial flows.

By applying Section 9 and Section 10 of the Prevention of Corruption Act 1988 (PCA), together with several landmark rulings issued by the Supreme Court of India, such as P. Shanthi Pugazhenthi v The State Represented by the Inspector of Police [2025 ISNC 674], the idea of corporate officials’ vicarious and direct criminal liability for corruption offences has moved from a theoretical risk to a real, present one. As per the newly introduced Corporate Laws (Amendment) Bill 2026, which raises the bar on director accountability and builds in automatic debarment for integrity failures, members of the executive leadership team can no longer treat anti-corruption as a side issue to be dealt with by the compliance team.

The statutory architecture: corporate guilt vs managerial liability

Supply-side liability took a decisive turn due to the 2018 amendments to the PCA, which introduced a strict liability framework for corporate entities. Understanding executive exposure means looking closely at how Sections 9 and 10 of the PCA work together.

Section 9: the commercial organisation as the principal offender

Under Section 9 of the PCA, a commercial organisation is directly liable if any person ‘associated with’ it gives or promises an undue advantage to a public servant to obtain or retain business or provide a business advantage. The definition of ‘associated person’ is deliberately broad, covering employees, third-party agents, consultants, vendors and subsidiaries. The offence under Section 9 is a strict liability offence related to the corporation, which means that the only statutory defence open to the company is showing that it had ‘adequate procedures’ in place to prevent such conduct.

Section 10: piercing the veil of executive accountability

While Section 9 punishes the company itself with a fine, Section 10 of the PCA goes after the people behind the corporate mask. It provides that where a commercial organisation commits an offence under Section 9 and that offence is shown to have been committed with the ‘consent or connivance’ of a director, manager, secretary or officer, that person is deemed to be guilty as well.

Individual executive imprisonment: three to seven years and personal fine (Section 10 PCA)

This departs from the general rule within Indian criminal law that means that automatic vicarious liability is not imposed unless a statute says so expressly. Section 10 is that express statutory bridge, attributing the company’s guilt directly to the individuals in control. The penalty is severe: mandatory imprisonment for between three and seven years, plus a personal fine.

Judicial expansion: the widening scope of abetment and ‘connivance’

Recent court rulings have lowered the bar further for investigators looking to target corporate management in the context of anti-corruption. Executives used to argue that unless they had personally signed off on a specific illicit payment, they lacked the mens rea (criminal intent) needed for a conviction. The Supreme Court of India has steadily taken this defence apart.

In P. Shanthi Pugazhenthi v The State, the Supreme Court of India interpreted abetment in public corruption cases broadly. The Court held that private individuals, including corporate intermediaries, board members and family members, who allow their bank accounts, shell companies or other corporate mechanisms to be used to process or park a public servant’s illicit wealth are liable for abetment under the PCA. Turning a blind eye or offering passive assistance, the Court said, amounts to ‘intentional aiding’ of such offences.

At the same time, Indian courts have started aligning the definition of ‘connivance’ under Section 10 with the internationally recognised standard of ‘wilful blindness’. The Central Bureau of Investigation (CBI) and the State Anti-Corruption Bureaus (ACBs) no longer need a director’s email authorising a bribe to make their case. If an executive ignored obvious ‘red flags’ (unusually high consultant fees, vague invoices from liaison agents or procurement channels being bypassed) or failed to exercise due diligence despite having a supervisory role, the courts are increasingly willing to infer connivance. Under India’s new criminal procedure law, known as the Bharatiya Nagarik Suraksha Sanhita (BNSS), investigators can skip lengthy preliminary inquiries and go straight to registering a first information report (FIR) if the initial material points to systemic corporate negligence.

The 2026 shift: the Corporate Laws (Amendment) Bill

Lawmakers have reinforced this focus on individual accountability by introducing the Corporate Laws (Amendment) Bill 2026. The Bill aims to make it easier to do business by decriminalising minor, purely procedural or clerical lapses, but, at the same time, it tightens the governance requirements for substantive corporate misconduct and integrity failures.

The Bill aims to tighten the ‘fit and proper’ criteria for directors under Section 164 of the Companies Act 2013, introducing an automatic, non-discretionary disqualification from directorship for anyone convicted of an offence under the PCA or related white-collar statutes. This disqualification would take effect from the date of conviction, which sharply limits an individual’s ability to hold a board position at an Indian company while an appeal is pending, unless a high court specifically grants a stay. The Bill also aims to strengthen the powers and independence of the National Financial Reporting Authority (NFRA), so that financial window-dressing, often used to disguise bribery through fictitious expenses or dummy vendors, draws closer scrutiny that feeds directly into the debarment of executives involved in such activities.

Building defences: practical safeguards for managerial personnel

To shield managerial personnel from exposure to serious criminal offences, companies need to move beyond paper-based compliance and build an active operational defence. Because an executive’s liability under Section 10 flows from the company’s failure under Section 9 of the PCA, protecting directors calls for a two-pronged approach: putting ‘adequate procedures’ in place for the company and reinforcing individual safeguards for the executive.

Building an ‘adequate procedures’ framework

The PCA’s statutory guidelines set out the broad outline of an anti-bribery and anti-corruption (ABAC) policy, but the framework still needs to be tailored to each company’s actual risk exposure.

Compliance pillar	Implementation mandate for corporate counsel
Top-level commitment and accountability	The board should adopt a clear, zero-tolerance ABAC policy that explicitly states that no employee or third-party agent has the authority to offer an ‘undue advantage’ to advance business interests.
Tailored risk mapping	Run structured, annual corruption risk assessments, focusing on high-risk touchpoints, such as regulatory approvals, environmental clearances, customs processing and public procurement bids.
Thorough third-party due diligence	Make sure every intermediary, liaison agent or consultant goes through independent background screening and that contracts include mandatory ABAC compliance clauses, audit rights and termination triggers for ethical breaches.
Reliable vigil mechanisms (whistleblower channels)	In line with Section 177(9) of the Companies Act, set up a genuinely confidential whistleblower mechanism with direct access to the company's audit committee, so that all whistleblowers are protected from internal retaliation.

Operational safeguards for directors and key managerial personnel (KMPs)

To protect KMPs and directors from personal exposure, companies should put the following protocols in place:

• the ‘dissenting voice’ protocol: under Indian corporate law, an independent or non-executive director can be held liable if a corrupt act took place with their knowledge. So, if a director raises concerns about an ambiguous transaction, an aggressive vendor payment or the irregular use of funds during a board or committee meeting, their dissent, questions and reservations should be recorded verbatim in the formal minutes of the meeting;
• structured delegation and sub-committees: boards should avoid concentrating decision-making in one place. Authority to approve high-value procurements or regulatory liaison budgets should sit with specialised sub-committees, with the delegation of authority clearly documented. This ensures that decision-making is traceable and stops liability from spreading to board members who had no real involvement in the activities concerned; and
• ring-fencing through comprehensive directors and officers (D&O) insurance: companies should take out specialised D&O liability insurance. Corporate counsel should make sure these policies include explicit ‘regulatory investigation advancements’, so that if an executive is named in an FIR or summoned by an investigative agency, their legal defence and representation costs are covered upfront, until there is a final, non-appealable finding of fraud or wilful misconduct.

Conclusion

Anti-corruption compliance can no longer be treated as a routine box-ticking exercise. As Indian regulatory and criminal enforcement agencies draw on the combined force of the PCA, the BNSS and the impending corporate reforms coming into force in 2026, it is clear that the corporate leadership team has become the clear focus of enforcement.

For white-collar defence attorneys and corporate counsel, the message is clear: protecting managerial personnel means building structural, auditable and consistently enforced safeguards into the everyday workings of corporate governance. Only sustained institutional deterrence can help an executive meaningfully counter the threat of statutory connivance and the professional debarment that follows.