The Corporate Laws (Amendment) Bill, 2026: Key Proposed Changes
The Corporate Laws (Amendment) Bill, 2026 was introduced in the Lok Sabha on March 23, 2026. As of April 2026, the bill is currently under examination by a parliamentary committee. This significant piece of legislation seeks to amend the Companies Act, 2013 and the Limited Liability Partnership (LLP) Act, 2008, aiming to decriminalise offences, ease compliance, and modernise India's corporate regulatory framework.
Key Amendments to the Companies Act, 2013
The bill proposes wide-ranging changes to the Companies Act. Here are the major highlights:
Decriminalisation of Offences
A central theme of the bill is the decriminalisation of several procedural and technical offences under the Act. Instead of imprisonment or fines, these offences will attract a civil penalty. Offences proposed for decriminalisation include wilful failure to furnish information about a producer company, contravention of rules, and failure to comply with certain requisitions from the Registrar of Companies.
Corporate Social Responsibility (CSR) Changes
The bill proposes to revise the CSR compliance threshold. Currently, companies with a net profit of Rs 5 crore or more are required to spend on CSR. The bill seeks to raise this net profit threshold to Rs 10 crore. Furthermore, it states that companies meeting certain prescribed conditions may be exempted from CSR compliance altogether.
Easing of Compliances
To promote ease of doing business, the bill introduces several compliance simplifications:
- Allows electronic service of documents for prescribed classes of companies.
- Permits companies to hold Annual General Meetings (AGMs) via video conferencing, mandating a physical meeting only once every three years.
- Exempts certain companies from mandatory auditor appointment.
- Replaces the requirement for certain affidavits with self-declarations.
Definition of Small Companies
The bill significantly expands the definition of a small company. The upper limit for paid-up share capital is proposed to be increased from Rs 10 crore to Rs 20 crore, and the turnover limit from Rs 100 crore to Rs 200 crore. This will bring more companies under the relaxed regulatory regime for small companies.
Mergers, Acquisitions, and Buy-Back
The bill seeks to simplify the approval process for schemes of merger or amalgamation for small companies and holding-subsidiary structures. It proposes to lower the shareholder approval threshold from 90% to a majority present and voting holding 75% of the shares. The creditors' approval threshold is also proposed to be reduced from 90% to 75%. For buy-back of shares, it introduces flexibility for prescribed classes of companies to exceed the current 25% limit.
Regulatory Bodies: NFRA and Valuation Authority
The bill expands the powers of the National Financial Reporting Authority (NFRA), allowing it to specify investigation procedures and issue advisories or censures. It also designates the Insolvency and Bankruptcy Board of India (IBBI) as the Valuation Authority, responsible for registering valuers and recommending standards.
Employee Compensation Schemes
Beyond Employee Stock Option Plans (ESOPs), the bill formally recognises other equity-linked compensation schemes like Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs).
Amendments to the LLP Act, 2008
The bill also amends the Limited Liability Partnership Act, 2008. A key provision allows for the conversion of specified trusts (registered with SEBI or IFSCA and engaged in prescribed activities) into Limited Liability Partnerships (LLPs), providing them with a more flexible business structure.
Note: This analysis is based on the bill as introduced. The final law may differ based on parliamentary committee recommendations and amendments during the legislative process.
