Corporate Laws Amendment Bill 2026: Key Changes for Companies and LLPs in India

The Corporate Laws (Amendment) Bill, 2026 was introduced in Lok Sabha on March 23, 2026. The Bill proposes amendments to both the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. It covers a wide range of reforms including decriminalisation of minor offences, changes to corporate social responsibility thresholds, recognition of new employee compensation instruments, restructuring of the National Financial Reporting Authority (NFRA), and the creation of a new framework for LLPs in International Financial Services Centres. The Bill represents one of the most comprehensive sets of amendments to corporate law since the Companies (Amendment) Act, 2020.

Decriminalisation of Minor Offences

The Bill shifts 21 minor and technical offences from a criminal prosecution framework to an electronic e-adjudication platform where only monetary penalties are levied. Under the current Companies Act, many procedural defaults such as delays in filing, minor disclosure lapses, and technical non-compliance carry the possibility of imprisonment and criminal prosecution. This has long been criticised as disproportionate, particularly for small and medium enterprises where directors face personal criminal liability for what are essentially administrative defaults. The e-adjudication platform proposed by the Bill will allow these matters to be resolved through a digital process with monetary penalties, removing the threat of imprisonment for non-violent, non-fraudulent technical defaults. This reform aligns with the broader ease of doing business agenda and follows recommendations made by the Company Law Committee in its 2019 report.

Corporate Social Responsibility: Revised Thresholds

The Bill changes the net profit threshold for CSR applicability to Rs 10 crore, or such other sum as may be prescribed. Under Section 135 of the current Companies Act, CSR provisions apply to companies with a net profit of Rs 5 crore or more in any financial year. The proposed increase to Rs 10 crore would exempt a significant number of smaller companies from CSR compliance, including committee formation, policy adoption, and the mandatory 2 percent spending requirement. The enabling provision allowing the threshold to be prescribed by rules provides flexibility for future adjustments without requiring a legislative amendment. Companies that meet the prescribed conditions will be entirely exempt from CSR provisions, including the requirement to constitute a CSR committee.

Employee Compensation Schemes and Director Qualifications

The current Companies Act recognises only employees' stock options (ESOPs) as a form of equity-linked compensation. The Bill expands this recognition to include other schemes linked to the value of the share capital of a company, specifically covering Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs). This brings the statutory framework in line with current compensation practices, particularly in the technology and start-up sectors where RSUs and SARs are widely used. On the governance side, the Bill expands director disqualification criteria and introduces a fit and proper person requirement for directors. It also mandates that directors must maintain an active Director Identification Number (DIN) throughout their tenure. Directors whose DIN is deactivated for non-compliance will face automatic disqualification, creating a stronger link between ongoing compliance and directorial eligibility.

NFRA Restructuring and IBBI as Valuation Authority

The Bill restructures the National Financial Reporting Authority (NFRA) into a quasi-judicial regulator with corporate status, independent rule-making power, and the authority to levy fees. Currently, NFRA operates under the direct administrative control of the Central Government with limited institutional autonomy. The proposed restructuring gives it a more independent institutional identity, similar to other statutory regulators. Separately, the Bill designates the Insolvency and Bankruptcy Board of India (IBBI) as the Valuation Authority responsible for granting certificates of registration and recognition to valuers. This consolidates the regulation of the valuation profession under IBBI, replacing the current fragmented arrangement where valuation standards are set by IBBI but registration and oversight lack a single dedicated authority.

IFSC LLP Framework and Practical Impact

The Bill introduces a framework for Specified IFSC LLPs, allowing limited liability partnerships set up in International Financial Services Centres such as GIFT City in Gujarat to operate with greater flexibility than domestic LLPs. This includes relaxations on partner requirements, compliance obligations, and cross-border structuring. The provision is designed to make the IFSC ecosystem more attractive for international fund managers, financial services firms, and fintech companies that prefer the LLP structure. Other notable provisions include allowing companies to hold their annual general meeting through video conferencing or audio-visual means, with the requirement that a physical meeting must be held at least once every three years. The Bill also permits electronic service of prescribed classes of documents, reducing the cost and logistical burden of physical dispatch. The Corporate Laws (Amendment) Bill is currently before Parliament and, if passed, will bring these changes into effect from a date to be notified by the Central Government.