Corporate Laws Amendment Bill 2026: What Every Company and LLP Must Know

The Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on 23 March 2026, proposes the most comprehensive overhaul of Indian corporate and partnership law in over a decade. Amending both the Companies Act, 2013 and the Limited Liability Partnership Act, 2008, the Bill has been referred to a 31-member Joint Parliamentary Committee (JPC) for scrutiny before it proceeds to enactment. Its provisions touch compliance, criminal liability, CSR obligations, LLP flexibility, governance of valuers, and the powers of the National Financial Reporting Authority. Businesses, founders, and legal practitioners should understand its core proposals now, before the JPC delivers its recommendations and the Bill moves toward law.

What the Bill Covers

The Bill introduces changes across the Companies Act, 2013 and the LLP Act, 2008 in several distinct categories. It decriminalises 21 minor offences under those statutes, replacing criminal prosecution with civil monetary penalties administered through an electronic adjudication platform. It revises the thresholds that define a "small company", amends the basis for mandatory CSR spending, clarifies rules on employee compensation schemes beyond ESOPs, provides a new pathway for certain registered trusts to convert into LLPs, and introduces operational flexibility for entities within International Financial Services Centres (IFSCs). It also gives the National Financial Reporting Authority (NFRA) formal corporate status and designates the Insolvency and Bankruptcy Board of India (IBBI) as the national Valuation Authority.

Key Changes for Companies Under the Companies Act 2013

The Bill raises the paid-up capital ceiling for "small companies" from Rs 10 crore to Rs 20 crore, and the turnover ceiling from Rs 100 crore to Rs 200 crore. Small companies benefit from lighter compliance requirements, including simplified annual returns and reduced audit obligations, so this change brings a larger set of entities within the favoured category. On CSR, the mandatory 2% spending obligation currently applies to companies with annual net profit exceeding Rs 5 crore. The Bill doubles this threshold to Rs 10 crore, exempting a meaningful number of mid-sized companies from the obligation altogether. Beyond ESOPs, the Bill formally recognises Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs) as permissible employee compensation instruments under the Companies Act, aligning statute with market practice. On criminal exposure, the Bill converts 21 categories of technical and procedural breaches from criminal offences to civil penalty matters. Delays in filing, minor certification lapses, and similar procedural defaults will no longer expose directors and officers to criminal prosecution or imprisonment. Instead, the Registrar of Companies or a designated officer will impose a monetary penalty through an electronic adjudication process. Finally, companies may hold Annual General Meetings via video conferencing or other audio-visual means, though a physical AGM must be held at least once every three years.

Key Changes for LLPs Under the LLP Act 2008

The Bill introduces the concept of an IFSC LLP, permitting LLPs operating within International Financial Services Centres to maintain their accounts, capital contributions, and financial records in permitted foreign currencies. Existing rupee-denominated contributions may be converted to foreign currency under rules to be prescribed by the government. This positions GIFT City and other IFSC zones as more attractive hubs for fund management, financial services, and cross-border holding structures that use the LLP vehicle. Separately, specified trusts registered with SEBI or IFSC regulators will be eligible to convert into LLPs. Upon registration of the conversion, all assets, liabilities, rights, and obligations of the trust vest automatically in the successor LLP, eliminating the need for individual transfers of each asset or consent from each counterparty. For minor non-compliances, LLPs that fail to respond to Registrar requisitions will face a fixed civil penalty of Rs 10,000 rather than criminal prosecution, consistent with the decriminalisation philosophy across both statutes.

NFRA, Valuation Authority, and Digital Governance

The National Financial Reporting Authority will be reconstituted as a body corporate with a dedicated fund and a clearer appeals mechanism. Its enforcement powers are expanded: NFRA may now issue advisories, censures, and warnings in addition to its existing disciplinary authority over auditors and audit firms of listed and large public interest entities. The Bill also empowers NFRA to specify its own regulations on the manner of investigation, giving it greater procedural autonomy. Separately, the IBBI will function as the national Valuation Authority, taking over registration, recognition, and oversight of registered valuers from the current fragmented regime spread across multiple regulators. The IBBI will also make recommendations to the central government on valuation standards. Companies may serve prescribed classes of documents electronically, and the self-declaration framework under both statutes will replace several traditional affidavits, reducing notarisation costs and turnaround times.

Practical Takeaways

The Bill is currently before the JPC and has not yet been enacted. No changes are in force until Parliament passes the Bill, it receives Presidential assent, and the relevant provisions are officially notified. That said, companies and LLPs should use this window to review whether the revised small company thresholds will change their compliance category and annual calendar; to assess whether the higher CSR threshold affects their spending obligations for the upcoming financial year; and to examine whether internal policies on RSUs and SARs need updating once the Bill comes into force. LLPs and advisers operating in the IFSC space should monitor the JPC's recommendations closely, as the IFSC LLP framework opens significant structuring options for investment funds and financial services entities. The decriminalisation of 21 offences also removes a meaningful source of personal liability risk for directors: once enacted, any pending prosecution for a covered offence should convert to a civil penalty proceeding. The Corporate Laws (Amendment) Bill, 2026 represents a considered effort to balance ease of doing business with governance quality. Its passage will mark a significant update to the legal infrastructure that governs the majority of registered business entities in India.