Corporate Laws (Amendment) Bill, 2026: Latest Companies Act and LLP Changes
The Corporate Laws (Amendment) Bill, 2026, proposes the biggest set of Companies Act and LLP changes in years, amending both the Companies Act, 2013, and the Limited Liability Partnership Act, 2008. The government introduced the Bill in the Lok Sabha on 23 March 2026 and referred it to a Joint Parliamentary Committee (JPC) for detailed review. The Bill contains 107 clauses and is recognized as Bill No. 85 of 2026.
The Bill aims to reduce compliance burdens, decriminalize certain technical defaults, modernize corporate governance, simplify LLP regulations, and strengthen audit oversight. It also proposes changes to small-company limits, CSR rules, mergers, shareholder meetings, IFSC entities, and regulatory powers. As the Bill is still under parliamentary review, these changes are proposals and are not yet in force.
Key Takeaways
- The Corporate Laws (Amendment) Bill, 2026, proposes major changes to the Companies Act, 2013, and the LLP Act, 2008. The Finance Minister introduced the Bill in the Lok Sabha on 23 March 2026, and the Joint Parliamentary Committee (JPC) is currently reviewing it as of July 2026.
- Higher small company limits may bring more businesses under the simplified compliance framework. The Bill raises the paid-up capital limit from ₹10 crore to ₹20 crore and the turnover limit from ₹100 crore to ₹200 crore. It also allows the government to exempt prescribed classes of small companies from statutory audit requirements.
- Revised CSR rules may reduce compliance obligations for eligible companies. The Bill increases the CSR applicability threshold from ₹5 crore to ₹10 crore of net profit, relaxes CSR Committee requirements, and extends certain timelines for transferring unspent CSR amounts.
- Stronger governance requirements may increase accountability for directors and auditors. The Bill tightens director eligibility rules, introduces a fit and proper test, strengthens NFRA oversight, and revises auditor independence requirements, including a three-year cooling-off period.
- Businesses do not need to take immediate action because the Bill is still under review. They should monitor the final provisions, assess their compliance position, and prepare for potential regulatory changes.
Key Changes Proposed Under the Corporate Laws (Amendment) Bill, 2026 at a Glance
The table below summarizes the major changes proposed to the Companies Act, 2013, and the Limited Liability Partnership Act, 2008 under the Bill:
| Area | What the Bill Proposes |
| Small company limits | Increase the paid-up capital limit from ₹10 crore to ₹20 crore and the turnover limit from ₹100 crore to ₹200 crore |
| CSR | Increase the net-profit threshold for CSR applicability from ₹5 crore to ₹10 crore and revise CSR committee requirements |
| Fast-track mergers | Reduce the approval threshold for members and creditors from 90% to 75%, subject to the proposed voting conditions |
| Meetings | Allow hybrid AGMs and EGMs, with at least one physical AGM every three years |
| Decriminalization | Replace criminal penalties for several technical and procedural defaults with civil penalties |
| LLPs | Simplify LLP incorporation and introduce provisions for trust-to-LLP conversion, valuation, appeals, and other regulatory changes |
| IFSC entities | Allow eligible companies and LLPs in IFSCs to maintain books and report financial information in permitted foreign currencies |
| Audit and NFRA | Restructure NFRA, expand its regulatory powers, and revise certain auditor independence and cooling-off requirements |
Note: The proposed LLP conversion route is specifically aimed at Alternative Investment Funds (AIFs) structured as trusts and registered with SEBI or IFSCA. The conversion will require three-fourths investor consent, and the partners of the resulting LLP must be exclusively the trustees of the trust.
What is the Corporate Laws (Amendment) Bill, 2026?
The Corporate Laws (Amendment) Bill, 2026, is a major legislative proposal introduced in the Lok Sabha on 23 March 2026 by the Finance Minister, Nirmala Sitharaman. By amending the Companies Act, 2013, and the Limited Liability Partnership Act, 2008, it aims to:
- Simplify compliance
- Reduce regulatory burdens
- Modernize corporate governance
The Bill follows recommendations from earlier corporate law reform initiatives, including the Company Law Committee Report, 2022, and other regulatory reform measures. Parliament has referred the Bill to a Joint Parliamentary Committee (JPC) for detailed examination, so the proposed changes may undergo revisions before becoming law.
Decriminalization of Corporate Defaults
The Corporate Laws (Amendment) Bill, 2026, moves several procedural and technical violations from criminal consequences to civil penalties.
The proposed changes cover defaults such as:
- Failure to provide information or documents to the Registrar of Companies.
- Non-compliance with prescribed rules under the Companies Act.
- Improper maintenance of books of accounts and records.
- Certain filing and documentation-related lapses.
Instead of facing criminal proceedings, companies, directors, and Key Managerial Personnel may face monetary penalties for these routine compliance failures. The Bill also revises the penalty framework to create a more proportionate enforcement system. The key changes include:
| Area | Proposed Change |
| Compounding of offenses | Raises the Regional Director’s compounding limit from ₹25 lakh to ₹1 crore, allowing more matters to be resolved administratively |
| Fraud provisions | Increases the mandatory imprisonment threshold from ₹10 lakh to ₹25 lakh and raises fines for smaller fraud cases up to ₹1 crore |
| Reduced penalties | Allows OPCs, small companies, start-ups, and producer companies to pay penalties up to 50% lower than regular penalties |
| Appeals | Requires a 10% pre-deposit of the penalty amount for certain appeals |
Note: Decriminalization applies mainly to technical defaults. Serious violations involving fraud, related party transactions, and major governance failures continue to attract stricter consequences.
Latest & Key Changes to the Companies Act, 2013 (2026 Amendment Bill)
The Corporate Laws (Amendment) Bill, 2026, introduces various key changes in the Companies Act, 2013:
1. Higher Small Company Limits
The Bill seeks to expand the small company category by increasing the following limits:
- Paid-up capital: From ₹10 crore to ₹20 crore
- Annual turnover: From ₹100 crore to ₹200 crore
These higher limits may allow more companies to qualify as small companies and follow simpler compliance requirements.
2. Changes to CSR Rules Under Section 135
The proposed Bill seeks to reduce CSR obligations for certain companies by:
- Raising the net-profit threshold for CSR applicability from ₹5 crore to ₹10 crore.
- Requiring a CSR Committee only when the CSR obligation exceeds ₹1 crore.
- Allowing an additional 90 days to transfer certain unspent CSR amounts.
- Empowering the Central Government to exempt prescribed classes of companies from CSR obligations.
These changes may reduce compliance requirements for eligible companies while allowing the government greater flexibility in implementing CSR rules.
However, Opposition MPs opposed the amendments. They alleged that increasing the CSR threshold and allowing wider exemptions could weaken CSR provisions and reduce corporate contributions to social initiatives.
3. Easier Fast-Track Mergers Under Section 233
The Corporate Laws (Amendment) Bill, 2026, revises the approval requirements for eligible fast-track mergers under Section 233. It recommends to:
- Lower the creditor approval threshold from 90% to 75%.
- Change the member approval requirement to 75% of the shares represented by members present and voting.
The revised thresholds may then allow more eligible companies to use the fast-track route instead of the regular NCLT process.
4. Flexible AGMs and EGMs
The Bill allows companies to conduct Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) through:
- Physical meetings
- Virtual meetings
- Hybrid meetings
Companies must still hold at least one physical AGM every three years, subject to the proposed provisions. Consequently, companies may enjoy more flexibility in managing shareholder meetings.
Note: A fully virtual EGM may also be called with only 7 days’ notice, instead of the usual 21-day notice period.
5. Greater Use of Digital Communication
The proposed provisions strengthen digital corporate governance by requiring prescribed companies to maintain:
- An official website
- An official email address
It also allows specified companies to serve certain documents electronically. These changes can make corporate communication faster and more accessible.
6. Updated Employee Incentives and Buy-Back Rules
The Bill recognizes newer employee incentive plans, including:
- Restricted Stock Units (RSUs)
- Stock Appreciation Rights (SARs)
It also allows prescribed companies to conduct up to two buy-backs in a financial year, with a minimum gap of six months, while removing the solvency-declaration affidavit requirement. These amendments may provide companies with greater flexibility in managing employee incentives and capital structure.
7. Statutory Audit Exemption for Small Companies (Section 139(12))
As per the Bill, the Central Government can exempt prescribed classes of companies, including certain small companies, from mandatory auditor appointment requirements (subject to specified conditions).
This change may help eligible companies:
- Reduce annual audit-related compliance costs.
- Simplify regulatory requirements for smaller entities.
- Lower the administrative burden of maintaining statutory audit processes.
8. Financial Year Realignment for Companies
The Bill proposes that companies and body corporates that follow a financial year different from 1 April to 31 March realign their reporting cycle.
This mainly benefits Indian subsidiaries of foreign companies that follow global reporting periods and helps them:
- Align financial reporting with Indian requirements.
- Reduce difficulties in consolidating group accounts.
- Improve coordination with parent companies.
9. Streamlined Board Meeting and Director Disclosure Rules
The proposed Bill relaxes certain governance requirements for smaller entities, including small companies, One Person Companies (OPCs), and dormant companies.
Key changes include:
- Allowing eligible companies to hold only one board meeting in a calendar year.
- Removing the minimum gap requirement between such meetings.
- Replacing annual blanket disclosures of director interests with event-based disclosures under Section 184.
These amendments reduce routine compliance requirements while maintaining necessary governance oversight.
10. Stronger Director Eligibility and Accountability Rules
The Bill strengthens director governance by introducing stricter eligibility and accountability requirements.
The proposed changes include:
- Expanding disqualification rules to cover persons who served as auditors, cost auditors, registered valuers, or insolvency professionals of the company or its group.
- Introducing a fit and proper person requirement for director appointments.
- Requiring independent directors to maintain independence throughout their tenure.
- Reducing the non-filing disqualification trigger from three consecutive financial years to two years.
- Preventing the reappointment of additional or casual-vacancy directors after shareholder rejection.
These measures aim to improve director accountability and strengthen corporate governance.
11. Enhanced Board Report Disclosures (Section 134)
Under Section 134, the Bill increases transparency requirements in board reports.
Companies must disclose:
- Reasons for not accepting Audit Committee recommendations.
- Details of adverse observations or qualifications made by auditors.
These disclosure requirements also extend to specified unlisted companies, improving accountability beyond listed entities.
12. Extended Timeline for Charge Registration (Section 77)
The proposed Bill provides companies more time to register charges created on their assets.
Key changes include:
- Extending the charge registration period from 120 days to 180 days.
- Reducing the risk of charges becoming invalid due to delayed filing.
- Introducing a maximum cap of ₹2 lakh on additional fees for delayed filing of financial statements and annual returns.
This change provides companies greater flexibility while maintaining filing discipline.
13. Faster Merger Process Through a Single NCLT Bench
The Bill simplifies merger proceedings by allowing scheme applications to be handled by a single NCLT bench. The application will have to be filed before the bench where the transferee company is registered.
Additional changes include:
- Preventing companies undergoing liquidation from filing merger schemes.
- Requiring the disposal of cross-held or treasury shares arising from pre-2013 schemes within three years.
These measures aim to reduce procedural delays and improve merger efficiency.
14. Easier Company Exit and Revival Process
The Corporate Laws (Amendment) Bill, 2026, simplifies the process for companies seeking closure or revival.
The proposed changes include:
- Expanding the scope of voluntary strike-off provisions.
- Making dormant status applications mandatory for companies that remain inactive for two years.
- Allowing revival and restoration applications through the Regional Director instead of the NCLT.
These changes may provide companies with faster and more cost-effective exit and revival options.
Key Changes to the LLP Act, 2008
The Corporate Laws (Amendment) Bill, 2026, introduces several changes to simplify LLP compliance, improve regulatory flexibility, and strengthen accountability.
1. Rationalized Professional Declarations During LLP Incorporation
The Bill simplifies compliance declarations during LLP incorporation.
Under the proposed framework:
- Professionals such as advocates, Chartered Accountants, Company Secretaries, and cost accountants need to provide compliance declarations only when they assist with incorporation.
- Partners can provide a self-declaration when they incorporate the LLP without professional assistance.
This change reduces procedural requirements and may lower incorporation costs for new LLPs.
2. Conversion of Regulated Trusts Into LLPs (Section 57A and Fifth Schedule)
The proposed Bill creates a framework that allows certain regulated trusts to convert into LLPs.
Eligible trusts include those:
- Registered under the Indian Trusts Act, 1882
- Established under applicable Central or State laws
- Regulated by SEBI or IFSCA
The trust must meet prescribed conditions and obtain required approvals, including consent from three-fourths of investors. After conversion, the LLP receives the trust’s assets and liabilities.
This change gives regulated trusts an additional structure for carrying out business activities.
3. Simplified Filings for Regulated LLPs
The Bill proposes that LLPs regulated by SEBI or IFSCA follow simpler filing requirements.
These LLPs may:
- Submit periodic filings instead of multiple event-based filings
- Reduce repetitive compliance requirements
This change may make regulatory reporting easier for regulated LLPs.
4. Structured Valuation Framework for LLPs (Section 33A)
The proposed Bill introduces a valuation framework for prescribed LLPs by extending the registered valuer framework under Section 247 of the Companies Act, 2013.
The framework covers valuations relating to:
- Partner contributions
- Property
- Assets
- Liabilities
This change creates a more consistent valuation process for LLPs.
5. New Appellate Mechanism for LLPs
The Bill introduces an appeal process for LLPs and partners against specified Registrar decisions and penalties.
The mechanism may cover:
- Incorporation-related decisions
- Name reservation matters
- Specified regulatory penalties
This change provides LLPs with a formal route to challenge certain regulatory decisions.
6. Framework for IFSC LLPs
The Corporate Laws (Amendment) Bill, 2026, creates a separate framework for LLPs operating in International Financial Services Centers (IFSCs).
An eligible IFSC LLP may:
- Maintain its registered office within the IFSC
- Use the designation “IFSC LLP”
- Undertake permitted financial service activities
- Maintain partner contributions and books of accounts in permitted foreign currencies
The Bill also provides transition provisions for existing IFSC LLPs. These changes aim to make IFSC LLPs more suitable for international financial operations.
IFSC, NFRA, and Auditor Changes
The Corporate Laws (Amendment) Bill, 2026, also introduces reforms beyond companies and LLPs. These changes focus on improving IFSC operations, strengthening audit oversight, and creating a clearer framework for valuers.
1. Greater Flexibility for IFSC Entities
The Bill provides greater operational flexibility to companies and LLPs operating in International Financial Services Centres (IFSCs).
The proposed changes allow eligible IFSC entities to:
- Issue capital in permitted foreign currencies.
- Maintain books of accounts and financial statements in permitted foreign currencies.
These measures aim to make IFSCs, including GIFT City, more suitable for global businesses.
2. Stronger Powers for NFRA
The proposed Bill strengthens the role of the National Financial Reporting Authority (NFRA) by restructuring it as an independent body corporate.
The proposed framework gives NFRA wider powers to:
- Investigate audit-related matters
- Impose penalties
- Issue regulations
- Provide an appellate mechanism against its orders
These changes aim to improve audit oversight and accountability.
3. Reforms for Auditors and Valuers
The Bill introduces changes to auditor independence and the valuation framework.
Key reforms include:
- Introducing a three-year cooling-off period for prescribed auditors after completing their tenure.
- Requiring audit-firm partners to register with the relevant statutory body.
- Recognizing the Insolvency and Bankruptcy Board of India (IBBI) as the Valuation Authority for registered valuers.
These measures aim to strengthen professional accountability and improve valuation standards.
What Corporate Laws (Amendment) Bill, 2026 Mean for Your Business?
Here’s how the proposed Corporate Laws (Amendment) Bill, 2026, can impact businesses of different sizes:
- Simpler Compliance for Small Companies: Higher small company limits may allow more businesses to access lighter compliance requirements, lower penalties, and potential audit exemptions.
- Lower CSR Burden: Revised CSR thresholds may reduce obligations for eligible companies while maintaining requirements for larger businesses.
- Easier Digital Operations: Hybrid meetings and electronic document delivery may help companies manage shareholder communication more efficiently.
- Better Flexibility for Startups and LLPs: Simplified LLP compliance, restructuring options, and appeal mechanisms may make regulatory processes easier.
- Faster Restructuring and Exit: Easier mergers, single-bench NCLT proceedings, expanded strike-off options, and easier revival routes may help companies restructure or exit faster.
- Stronger Governance Requirements: Tighter director eligibility rules and auditor independence requirements may increase accountability for companies and professionals.
- More IFSC Opportunities: Foreign currency flexibility for eligible IFSC companies and LLPs may support global business operations.
Since the Bill is still under parliamentary review, businesses do not need to take immediate action. However, they should monitor the final changes, review current compliance practices, and strengthen governance processes to prepare for future requirements.
Need help understanding how these proposed changes under the Corporate Laws (Amendment) Bill, 2026, may affect your company or LLP? RegisterKaro can help you manage compliance requirements, understand regulatory updates, and stay prepared for evolving corporate laws. Contact us today for a free consultation!
