Corporate Laws (Amendment) Bill, 2026
Corporate Laws (Amendment) Bill, 2026
Every Proposed Change — Explained
India’s most significant corporate law reform since 2013 has arrived. Introduced in Lok Sabha on March 23, 2026 and referred to a Joint Parliamentary Committee, the Corporate Laws (Amendment) Bill, 2026 proposes sweeping changes to the Companies Act, 2013 and the LLP Act, 2008. This comprehensive guide by Corpzo.com breaks down every proposed amendment and what it means for your business.
Why the Corporate Laws (Amendment) Bill, 2026 Matters
The Corporate Laws (Amendment) Bill, 2026 is not an incremental tweak — it is a foundational recalibration of India’s corporate regulatory philosophy. Introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman on March 23, 2026, the Bill has since been referred to a 31-member Joint Parliamentary Committee (JPC) for clause-by-clause scrutiny before it returns to Parliament for passage.
The Bill draws its mandate from two primary sources: the recommendations of the Company Law Committee (2022) and the High Level Committee on Non-Financial Regulatory Reforms (2025). Its stated objective is to facilitate “greater ease of doing business for corporates” while simultaneously strengthening institutional oversight — a dual agenda that runs through every proposed amendment.
Facilitate first, enforce where necessary
Finance Minister Sitharaman emphasised in the Lok Sabha that the Bill’s underlying approach is “facilitate first, enforce where necessary” — shifting from the historically punitive posture of criminal prosecution for minor defaults to a proportionate, penalty-based regime.
Two Acts, hundreds of provisions
The Bill amends both the Companies Act, 2013 (which governs ~2.5 million companies in India) and the Limited Liability Partnership Act, 2008 (which governs ~3.2 lakh LLPs). The amendments touch everything from entity definitions to audit oversight to M&A procedures.
Part of a decade-long reform journey
The 2026 Bill follows the Companies (Amendment) Acts of 2015, 2017, 2019, 2020, and 2021 — each progressively decriminalising, simplifying, and digitising corporate compliance. The 2026 Bill is the most comprehensive since the 2013 Act itself.
India positions itself as global corporate hub
With strong IFSC-specific provisions, trust-to-LLP conversion, and NFRA upgradation, the Bill signals India’s ambition to attract global capital, compete with Singapore and Dubai for financial services domicile, and position GIFT City as a world-class IFSC.
Decriminalisation of 21 Offences — From Prison to Penalty
The most impactful philosophical change in the Bill is the large-scale decriminalisation of procedural and technical defaults under both the Companies Act, 2013 and the LLP Act, 2008. The Bill proposes shifting 21 minor and procedural offences from a criminal court-based prosecution system to an electronic e-adjudication platform where only civil monetary penalties are levied — removing the risk of imprisonment for technical non-compliance.
Failure to furnish producer company information
Wilful failure to furnish information related to the affairs of a producer company — previously a criminal offence attracting prosecution — is now converted to a civil monetary penalty.
Contravention of Rules under the Act
General contraventions of Rules notified under the Companies Act (where no specific penalty is elsewhere prescribed) are decriminalised from criminal prosecution to defined monetary penalties.
Failure to furnish documents to Registrar
Non-compliance with Registrar requisitions for information or documents (other than summons, which continue under criminal law) is shifted to a penalty-only regime.
Books of account violations
Violations of requirements related to maintenance of books of account — previously triggering criminal liability — are converted to civil penalties, bringing focus on correction rather than punishment.
AGM-related non-compliance
Non-compliance with Annual General Meeting requirements is shifted from potential criminal prosecution to defined monetary penalties, reducing exposure for directors and company secretaries.
Non-compliance with Registrar requisitions
For LLPs, failure to comply with Registrar requisitions is no longer a criminal offence — replaced with a fixed penalty of ₹10,000 on the e-adjudication platform.
Corporate Social Responsibility — Thresholds Raised, Compliance Eased
The Corporate Social Responsibility (CSR) framework under Section 135 of the Companies Act, 2013 is proposed to be rationalised in two significant ways that will provide immediate relief to a large segment of India’s corporate sector, particularly smaller companies and growing MSMEs:
| CSR Parameter | Current Position | Proposed Amendment | Impact |
|---|---|---|---|
| Net Profit Threshold for CSR Applicability | ₹5 Crore net profit | ₹10 Crore net profit (or higher as prescribed) | Large number of small companies exempted from mandatory CSR |
| Unspent CSR Transfer Timeline (Ongoing Projects) | 30 days from year-end | 90 days from year-end | Companies get 3x more time for ongoing project transfers |
| Net Worth Threshold | ₹500 Crore | Unchanged | Large company CSR obligations continue |
| Turnover Threshold | ₹1,000 Crore | Unchanged | Large company CSR obligations continue |
| Mandatory CSR Spend | 2% of average net profit (3 yrs) | Unchanged in quantum | Rate unchanged; applicability threshold changed |
National Financial Reporting Authority — From Watchdog to Enforcer
One of the most significant institutional reforms in the Bill is the substantial expansion of the powers and status of the National Financial Reporting Authority (NFRA) — India’s independent regulatory body for audit and accounting standards. The Bill proposes to bring NFRA on par with other powerful financial regulators like SEBI, CCI, and IBBI.
Corporate Status — NFRA Becomes a Body Corporate
The Bill grants NFRA formal corporate status — making it a body corporate with a common seal, perpetual succession, and the ability to sue and be sued in its own name. This structural upgrade places it alongside SEBI, IBBI, and CCI in institutional standing.
Power to Issue Directions and Make Regulations
NFRA is empowered to make its own regulations governing its functioning, delegate powers to members and officers (creating a division between investigation and disciplinary functions), and issue binding advisories, warnings, and directions to auditors and audit firms.
Mandatory Auditor Registration with NFRA
The Bill introduces mandatory registration and reporting requirements for auditors with NFRA. Non-compliance with registration requirements or furnishing of false information to NFRA now attracts specific penalties and prosecution — a significant accountability enhancement.
Non-Audit Services Restriction — Extended 3 Years Post-Audit
The Bill reinforces auditor independence by restricting non-audit services not just during the audit tenure but also for 3 years after the conclusion of the audit relationship. This prevents the “revolving door” between audit and consulting that has historically compromised independence.
Domain Expert Engagement by NFRA
NFRA is authorised to engage external domain experts to support its oversight functions — enabling it to tap specialised technical knowledge for complex audit quality reviews in areas like financial instruments, derivatives, and sector-specific accounting.
Dedicated NFRA Fund & Appeal Mechanism
The Bill provides for the establishment of a dedicated fund for NFRA’s operations (ensuring financial independence) and introduces a formal appeal mechanism against NFRA orders — providing auditors due process safeguards while strengthening enforcement.
Faster, Simpler Mergers — Fast-Track & Regular Mergers Rationalised
The Bill proposes significant improvements to India’s merger and amalgamation framework — both for the fast-track process under Section 233 (which bypasses the NCLT) and for regular mergers. The changes aim to reduce approval thresholds, eliminate jurisdictional complexity, and speed up corporate restructuring timelines:
| Merger Parameter | Current Position | Proposed Change |
|---|---|---|
| Shareholder Approval Threshold (Fast-Track) | 90% of total shares | Majority present and voting holding 75% of shares |
| Creditor Approval Threshold | 90% in value | 75% in value |
| NCLT Filing (Regular Mergers) | Both acquirer and target NCLTs | Only acquirer company’s NCLT jurisdiction |
| Fast-Track Eligibility | Two small companies / holding + WOS | Expanded to include broader classes including startups |
| Valuation Authority | IBBI-empanelled valuers | IBBI designated as Valuation Authority; extended to LLPs |
Share Buyback Flexibility — Two Buybacks Per Year Now Possible
The Bill proposes a significant relaxation of India’s share buyback rules for a prescribed class of companies. Under the current framework, a company can conduct only one buyback offer in any 12-month period — a restriction that has limited capital management flexibility for cash-rich, debt-free companies. The proposed changes are:
Two buybacks per year for prescribed companies
The Bill enables a prescribed class of companies (expected to be debt-free companies) to conduct up to two share buyback offers within a single financial year — providing far greater flexibility in returning surplus cash to shareholders and managing capital structure.
Minimum 6-month gap between buybacks
To prevent misuse, a mandatory minimum gap of 6 months between the closure of the first buyback offer and the opening of the second is prescribed. This ensures a cooling-off period and prevents continuous market manipulation.
25% cap on paid-up capital + free reserves retained
The existing restriction that buyback must not exceed 25% of the aggregate paid-up capital and free reserves remains. The Bill adds flexibility for prescribed classes to have higher percentages — subject to separately prescribed limits.
Affidavit for solvency declaration removed
The requirement of a formal affidavit from directors for the declaration of solvency in buyback transactions is proposed to be eliminated — reducing procedural burden while retaining the substantive solvency check requirement.
Virtual & Hybrid AGMs — Corporate Governance Modernised
Reflecting the post-pandemic reality of digital governance, the Bill provides a statutory framework for companies to conduct general meetings through physical, virtual, or hybrid modes — embedding the flexibility that was introduced as a temporary measure during COVID-19 into permanent company law:
Virtual & Hybrid AGMs / EGMs Permanently Enabled
Companies can now hold AGMs and EGMs through video conferencing or other audio-visual means — either fully virtual or hybrid (physical + virtual). This enables shareholder participation irrespective of geographic location, particularly benefiting retail investors and NRI shareholders.
Mandatory Physical AGM Once Every 3 Years
To preserve the tradition of in-person shareholder engagement, at least one physical AGM must be held in every 3-year block. This balances digital convenience with the accountability that physical meetings provide — preventing companies from entirely abandoning face-to-face shareholder interaction.
Electronic Service of Documents Mandated
Prescribed classes of companies must serve specified statutory documents to members exclusively through electronic mode (website, email), with physical copies available on member request (subject to a fee approved by general meeting). This marks a decisive digital-first shift in corporate communications.
RSUs, SARs and Share-Linked Schemes Formally Recognised
One of the most forward-looking provisions in the Bill is the formal statutory recognition of equity-linked compensation instruments beyond the existing Employee Stock Option Plan (ESOP) framework — reflecting the reality of how modern companies, particularly startups and tech firms, structure executive compensation:
Restricted Stock Units (RSUs)
RSUs — grants of company shares that vest over time upon meeting specified service or performance conditions, without any purchase price — are formally recognised under the Companies Act. This fills a critical gap for startups that structure compensation through RSUs but had no specific statutory framework.
Stock Appreciation Rights (SARs)
SARs — instruments that entitle employees to cash or shares equal to the appreciation in share value between grant date and exercise date — are now recognised as a distinct compensation instrument. SARs are widely used in multinational companies and cross-border employee compensation structures.
All Share-Linked Schemes Covered
The Bill provides an open-ended framework recognising “other schemes linked to the value of share capital” — giving companies flexibility to design innovative equity-linked compensation instruments as business practices evolve, without needing fresh legislative amendments for each new instrument type.
Small Company Thresholds Doubled — More Companies Get Compliance Relief
The Bill proposes a significant upward revision of the financial thresholds for classification as a “Small Company” under Section 2(85) of the Companies Act, 2013. Small Companies enjoy several compliance relaxations — from abridged financial statements to exemption from mandatory rotation of auditors — making this threshold change directly impactful for a large number of companies:
| Classification Criterion | Current Threshold | Proposed Threshold | Relief Unlocked |
|---|---|---|---|
| Paid-Up Share Capital | ₹10 Crore | ₹20 Crore | Companies between ₹10-20 Cr paid-up capital qualify |
| Annual Turnover | ₹100 Crore | ₹200 Crore | Companies between ₹100-200 Cr turnover qualify |
| Abridged Annual Return | Only MGT-7A | Continues with higher threshold | More companies file simpler MGT-7A |
| Abridged Financial Statements | ₹10 Cr limit | ₹20 Cr limit | More companies file shorter accounts |
| Board Meeting Frequency | 2 meetings per year | Continues at 2 meetings per year | More companies eligible for reduced meeting requirement |
LLP Act Transformed — IFSC Integration, Foreign Currency & Trust Conversion
A substantial portion of the Bill is dedicated to modernising the LLP Act, 2008 — particularly to create a robust framework for LLPs operating in International Financial Services Centres (IFSCs) like GIFT City, Gujarat. These reforms position LLPs as globally competitive vehicles for investment funds, family offices, and professional services firms:
Specified IFSC LLPs — New Legal Category
The Bill formally introduces the concept of “Specified IFSC LLPs” — LLPs incorporated within IFSC jurisdiction, subject to IFSCA oversight, with the requirement to maintain a registered office within the IFSC. This creates a dedicated legal category for IFSC-based LLPs with tailored compliance requirements.
Foreign Currency Operations for IFSC LLPs
IFSC LLPs can now maintain accounts, partner contributions, and financial records in permitted foreign currencies (aligned with IFSCA regulations). Existing IFSC LLPs must convert INR partner contributions to foreign currency within a prescribed transition timeline. Fees, fines, and penalties remain payable in Indian rupees.
Trust-to-LLP Conversion — New Conversion Route
The Bill introduces a landmark new pathway allowing specified trusts to convert into LLPs. Eligible trusts must: (a) be registered with SEBI or IFSCA, (b) be established under the Indian Trusts Act 1882 or any other central/state Act, and (c) be engaged in prescribed activities. Upon conversion, all assets, liabilities, rights, and obligations of the trust vest automatically in the LLP, and the trust is deemed dissolved.
75% Investor Consent for Trust Conversion
Conversion of a trust to an LLP requires the written consent of at least 75% of the trust’s investors by value — ensuring broad stakeholder buy-in before this significant structural change. Upon registration of conversion, existing agreements, employment arrangements, and ongoing proceedings continue in the LLP seamlessly.
Registered Valuers Framework Extended to LLPs
The valuation framework under Section 247 of the Companies Act (which mandates the use of Registered Valuers for specific transactions) is extended to LLPs — bringing LLP valuation requirements in line with company law standards and improving transparency in LLP restructurings.
IFSC Companies — Foreign Currency Capital
Companies incorporated in IFSCs are now allowed to convert, issue, and maintain share capital in permitted foreign currencies (as prescribed by IFSCA). Books of accounts, financial statements, and other records can also be maintained in the permitted foreign currency unless IFSCA directs otherwise.
Additional Significant Changes in the Bill
Trust Registered as Beneficial Owner; Trustee as Member
The Bill clarifies that where a trust holds shares in a company, the trust shall be registered as the beneficial owner and the trustee shall be registered as the member in the company’s register of members. This eliminates the legal ambiguity around trust shareholding that has historically complicated company law compliance.
IBBI Designated as Valuation Authority
The Insolvency and Bankruptcy Board of India (IBBI) is designated as the Valuation Authority under the Companies Act — formalising its existing de facto role as the regulator for registered valuers and creating a clearer institutional structure for the valuation profession in India.
Enhanced Role of Regional Directors
The Bill enhances the operational role and powers of Regional Directors (RDs) — decentralising decision-making from MCA headquarters to the regional level, improving administrative efficiency, and reducing processing timelines for approvals and filings at the regional level.
Simplified LLP Incorporation for IFSC Entities
For IFSC LLPs, the Bill introduces a simplified incorporation process with mandatory declarations by specified professionals (CA, CS, or Advocate) instead of the more complex process for regular LLPs — reducing the time and cost of setting up fund management and financial services LLPs in GIFT City.
SEBI/IFSCA-Regulated LLPs — Flexible Agreement Filing
LLPs regulated by SEBI or IFSCA are granted flexibility in filing LLP agreement changes, recognising that these entities operate under additional sectoral regulatory oversight that provides equivalent safeguards to the standard LLP filing requirements.
Additional Fees for Late Filings — Rationalised
The Bill proposes rationalisation of additional fees for late filings with the Registrar — reducing the financial penalty for technical delays in procedural filings while maintaining appropriate consequences for substantive non-compliance, further supporting the “facilitate first” approach.
Navigate the Corporate Laws Amendment Bill 2026 with Corpzo
As the Bill progresses through the JPC and towards enactment, companies, LLPs, and their boards need a trusted compliance partner to assess impact, plan transitions, and file correctly under the new regime. Corpzo is that partner.
Corporate Laws Amendment Bill 2026 — Key Questions Answered
Stay Ahead of Every Corporate Law Change in 2026
As India’s most significant corporate law reform in a decade moves through Parliament, Corpzo ensures your company, LLP, or AIF is fully prepared for every proposed amendment — from decriminalisation to IFSC integration to CSR rationalisation.
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