Corporate Laws (Amendment) Bill, 2026 Introduced to Amend Companies and LLP Laws

On March 23, 2026, the Corporate Laws (Amendment) Bill, 2026 (Bill) was introduced in the Lok Sabha, building on the recommendations of the Company Law Committee and the High-Level Committee on Non-Financial Regulatory Reforms. The Bill proposes amendments across both the Companies Act, 2013 (CA 2013) and the Limited Liability Partnership Act, 2008 (LLP Act), with different provisions intended to come into force on dates to be notified by the Central Government. The Bill has been referred to a Joint Parliamentary Committee (JPC) which is expected to undertake comprehensive scrutiny of each clause, invite stakeholder representations, and submit its recommendations to Parliament.

I. AMENDMENTS TO THE COMPANIES ACT, 2013

Flexibility in Buy-Back of Securities

The Bill proposes significant relaxations to the buy-back of securities regime under CA 2013, aimed at making buy-back of securities a more efficient mechanism for return of capital:

• • Higher Buy-Back Threshold for Prescribed Companies: The existing provisions that cap buy-backs of securities at 25% of the aggregate of paid-up capital and free reserves, are proposed to be replaced with two provisos: (i) prescribed classes of companies may now buy-back shares up to such higher percentage of the aggregate of paid-up capital and free reserves as may be prescribed by rules, and (ii) for equity share buy-backs in any financial year, the 25% (or such other prescribed percentage) threshold would be computed with reference to total paid-up equity capital in that financial year.

• • Multiple Buy-Back Offers in a Year: The Bill proposes that prescribed classes of companies (expected to include debt-free companies) may make up to two buy-back of securities offers within a period of one year, provided the second offer is made no earlier than six months from the closure of the preceding offer. This replaces the one-year cooling-off period under the existing law.

Streamlining Mergers and Amalgamations

The Bill proposes several amendments to the compromise, arrangement and amalgamation framework under the CA 2013:

• • Single Tribunal Jurisdiction: With respect to schemes involving transferor company and transferor companies situated in separate States, a new proviso proposed to be included in Section 230(1) provides that applications under the compromise, arrangement and amalgamation framework shall be filed before the National Company Law Tribunal (Tribunal) having jurisdiction over the transferee company or resultant company, as the case may be. Applications pending as on the date of commencement would continue before the Tribunals where they were originally filed.

• • Revised Thresholds for Fast-Track Mergers: The regime for Fast-Track Mergers is also proposed to be substituted to require approval by a majority of members or class of members present and voting, holding at least 75% of the value in shares held by such members present and voting as opposed to the 90% threshold under the existing law. The creditor approval threshold is similarly reduced from nine-tenths to three-fourths in value.

• • Treatment of Treasury Shares: The Bill also addresses shares held by a transferee company in its own name or through a trust (on its behalf or on behalf of subsidiaries or associates) pursuant to pre-CA 2013 compromises or arrangements. The Bill proposes that such shares must be dealt with or disposed of within three years from the commencement of the Bill, failing which they shall be cancelled and extinguished, deemed a reduction of share capital, with a continuing penalty of INR 10,000 per day of default.

Decriminalisation of Offences

A central theme of the Bill is the decriminalisation of procedural and technical defaults. Illustratively:

• • Punishment for failure keep the amount received on application from the public for subscription to the securities in a separate bank account or failure to repay the amount within the time specified by the Securities and Exchange Board of India, received from applicants in pursuance of the prospectus in case of the company being unable to allot securities, is now proposed that the company be liable to a penalty of not less than INR 5 lakhs but which may extend to INR 50 lakhs and every officer in default shall be punishable with fine of not less than INR 50 thousand but which may extend to INR 3 lakhs, instead of being punishable with a fine.

• • Any contravention of Chapter XXII, related to companies incorporated outside India, under CA 2013, such as failing to deliver to the Registrar of Companies (RoC), the required charter documents of a foreign company’s new place of business in India, is proposed to result in the company being liable to a penalty which may extend to INR 3 lakhs and in the case of a continuing offence, with an additional fine which may extend to INR 50 thousand for every day after the first during which the contravention continues and every officer of the foreign company who is in default shall be punishable with fine which shall not be less than INR 25 thousand but which may extend to INR 5 lakhs, instead of being punishable with a fine.

Strengthening the National Financial Reporting Authority

The Bill proposes to significantly enhances the institutional framework of the National Financial Reporting Authority (NFRA), transforming it into a fully autonomous regulator:

• • Expanded Enforcement Powers: In addition to existing penalty and debarment powers, NFRA may now issue advisories, censures, or warnings, require additional professional training, and refer matters to the Central Government. Non-compliance with NFRA orders would attract imprisonment (up to 6 months) and fines.

• • Auditor Registration and Oversight: Proposed amendments also require auditors of prescribed classes of companies to intimate their registration details to NFRA and file returns. Penalties for non-compliance or furnishing false information would range from INR 25,000 to INR 50 lakhs.

Virtual and Hybrid General Meetings

The Bill also seeks to insert new provisions permitting companies to hold annual general meetings (AGMs) and extraordinary general meetings (EGMs) through video conferencing or other audio-visual means, either wholly or partly. However, every company must hold at least one AGM in physical mode within every three years. EGMs conducted wholly through virtual means may be called with a shorter notice of seven days.

Corporate Social Responsibility (CSR) Reforms

The Bill proposes several relaxations to the CSR framework under CA 2013:

• • The net profit threshold triggering mandatory CSR obligations is proposed to be raised from INR 5 crores to INR 10 crores (or such sum as may be prescribed).

• • The timeline for transferring unspent CSR amounts relating to ongoing projects to the Unspent CSR Account is proposed to be extended from 30 days to 90 days from the end of the financial year.

• • The CSR Committee exemption threshold is proposed to be raised to INR 1 crore (or such higher amount as may be prescribed).

• • Additionally, prescribed classes of companies fulfilling prescribed conditions are proposed to be exempted entirely from CSR compliance.

Expanded Small Company Definition

The definition of ‘small company’ is also proposed to be expanded by doubling the upper limits: paid-up share capital from INR 10 crores to INR 20 crores and turnover from INR 100 crores to INR 200 crores. This brings a significantly larger universe of private companies within the relaxed compliance regime applicable to small companies, including reduced penalties, relaxed board meeting requirements, and potential exemption from statutory audit requirements for prescribed classes.

Directors: Governance Tightening and Operational Ease

The Bill proposes a mix of stricter governance requirements and operational simplifications for directors:

• • Director Identification Number (DIN) Lifecycle Management: New provisions pertaining to DIN allotment provide for periodic verification of DIN particulars, grounds for deactivation or cancellation (non-compliance, contravention, court/Tribunal orders), consequences (vacancy of office upon cancellation), voluntary surrender, and reactivation procedures.

• • Fit and Proper Criteria: The Bill proposes provisions that seek to disqualify a person from directorship if the board of directors has not assessed them as ‘fit and proper’ per prescribed criteria, which may differ across classes of companies.

• • Additional Directors and Casual Vacancies: Provisions governing appointment of Directors is also sought to be amended to provide that additional directors and directors filling casual vacancies hold office until the next general meeting or three months from appointment, whichever is earlier. This proposed amendment also prevents re-appointment as additional or alternate director of persons whose appointment was not considered or approved by members, without prior member approval.

• • Independent Director Reforms: The Bill proposes to broaden disqualification conditions for independent directors to include the disqualification occurring in the current financial year (not only preceding years, as under the existing law), introduces a continuing compliance obligation during the term, extends the cooling-off period restriction to holding, subsidiary, and associate companies, and clarifies that tenure as an additional director counts towards the independent director’s maximum tenure.

• • Disclosure of Interest: The requirement for mandatory annual disclosure at the first board of directors meeting of each financial year is proposed to be removed; disclosures would only be required when there is a change.

Key Managerial Personnel (KMP) Resignation

The Bill proposes a formal mechanism for resignation of whole-time KMP who are not directors. The KMP may resign by giving written notice; the board of directors must intimate the RoC. Where the company fails to do so, the KMP may directly forward the resignation to the RoC. The resignation takes effect from the date of receipt of resignation by the company or such later date as specified. Liability for defaults during tenure survives resignation.

II. AMENDMENTS TO THE LIMITED LIABILITY PARTNERSHIP ACT, 2008

International Financial Services Centres (IFSC) Centric Reforms

The Bill proposes a comprehensive framework for LLPs operating in IFSCs, mirroring the IFSC-specific provisions introduced for companies under CA 2013. Key elements include:

• • Registered Office and Name: The Bill proposes that specified IFSC LLPs must maintain their registered office within the IFSC at all times and include the suffix ‘International Financial Services Centre LLP’ in their name.

• • Foreign Currency Operations: The Bill proposes that partner contributions must be accounted for in a permitted foreign currency. Pre-existing IFSC LLPs must convert from INR within prescribed timelines and may not accept new contributions in INR after commencement. Books of accounts, financial statements and records must be maintained in the permitted foreign currency, with IFSC Authority-permitted exception for INR reporting. Filing with the RoC may be required in permitted foreign currency, though fees, fines and penalties remain payable in INR.

Conversion of Specified Trusts into LLPs

The Bill proposes conversion of ‘specified trusts’ into LLPs. This amendment is intended to facilitate conversion of Alternative Investment Funds (AIFs) structured as trusts into LLPs.

Eligibility requires that the partners of the resultant LLP are exclusively the trustees of the specified trust. Conversion requires consent of three-fourths of the investors. Upon conversion, all property, assets, rights, liabilities and obligations vest in the LLP without further assurance. The specified trust is deemed dissolved. Pending proceedings, existing agreements, contracts, and employment arrangements continue against the LLP. Trustees remain personally liable (jointly and severally with the LLP) for pre-conversion liabilities.

Easing Compliance for Alternative Investment Funds

To accommodate the particular requirements of AIFs structured as LLPs, the Bill proposes relaxations in the filing of changes to LLP agreements and changes in partners. For prescribed classes of LLPs regulated by Securities and Exchange Board of India or IFSC Authority, filing of changes to the LLP agreement and furnishing details of partner changes to the RoC would be required on an annual basis rather than within the existing 30-day window.

Valuation Requirements for LLPs

The Bill also proposes to extend the registered valuer framework under CA 2013 to LLPs on a mutatis mutandis basis, covering valuations of partner contributions, LLP property, assets, net worth, and liabilities.

Conclusion

The Bill represents the most extensive set of proposed amendments to Indian corporate legislation since the Companies (Amendment) Act, 2020, touching virtually every stage of a company’s and LLP’s lifecycle – from incorporation and ongoing governance, through mergers and capital management, to strike-off and winding up.

The decriminalisation agenda is substantially advanced, with a new enforcement architecture comprising penalty recovery officers, settlement mechanisms, and pre-deposit requirements for appeals.

The Bill is currently before the JPC. Its provisions will come into force only upon notification by the Central Government, with different dates possible for different provisions. Market participants and corporates would do well to track the JPC’s deliberations and any amendments that may be recommended, as the final enacted legislation may differ materially from the Bill as introduced.