Corporate Laws (Amendment) Bill, 2026: 10 Things Businesses Need to Know

The Corporate Laws (Amendment) Bill, 2026, introduces sweeping changes to the Companies Act, 2013, and the Limited Liability Partnership (LLP) Act, 2008, aiming to modernize India’s corporate regulation, strengthen governance, and boost India’s position as a global business hub.

The Corporate Laws (Amendment) Bill, 2026, notified on March 23, 2026, is an important step in India’s corporate law reform agenda. India’s Union Finance Minister introduced the Bill in the Lok Sabha and subsequently referred it to a Joint Parliamentary Committee (JPC) for detailed scrutiny.

Amendments proposed in the bill aim to streamline compliance, strengthen governance, and enhance India’s investment climate. The central government emphasizes that the legislation was developed through extensive stakeholder consultations over two years.

Here are the 10 key takeaways shaping the future of corporate regulation under the Companies Act, 2013, and the Limited Liability Partnership (LLP) Act, 2008.

1. IFSC-centric reforms take center stage

The Corporate Laws (Amendment) Bill, 2026, introduces a structured framework for LLPs operating in IFSCs under the International Financial Services Centres Authority (IFSCA), formally integrating IFSC concepts into the LLP Act, 2008.

The amendments:

1. Define key terms such as IFSC, IFSCA, permitted foreign currency, and specified IFSC LLPs
2. Restrict such LLPs to permitted financial services activities
3. Provide compliance flexibility for LLPs regulated by IFSCA or Securities and Exchange Board of India (SEBI)

Overall, the reforms align LLP regulation with sectoral oversight, supporting India’s positioning as a global financial services hub.

2. Foreign currency operations for IFSC entities

The corporate law amendment bill proposes entities in IFSCs to operate in foreign currency, aligning with global financial practices under the IFSCA.

Key clarifications

• Specified IFSC LLPs must account for and disclose partner contributions in a permitted foreign currency under the LLP Act, 2008.
• LLPs already operating in IFSCs must convert partner contributions from INR to foreign currency within a prescribed timeline. Post-amendment, no new contributions can be accepted in INR.
• Such LLPs are required to maintain books of account and financial statements in foreign currency, with limited flexibility to use INR if permitted by the regulator.
• Similarly, IFSC companies under the Companies Act, 2013, may issue share capital and maintain financial records in foreign currency.

3. Introduction of specified IFSC LLPs

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The amendment bill introduces specified IFSC LLPs as a distinct category under the LLP Act, 2008. A specified IFSC LLP refers to an LLP that is incorporated within an IFSC, regulated by IFSCA, and undertakes permitted financial services activities.

This classification creates a specialized legal and regulatory framework for LLPs operating in financial services within IFSCs, subject to dedicated sectoral oversight.

4. Trust-to-LLP conversion framework

The amendment expands the conversion regime under the LLP Act, 2008, by introducing a framework for the conversion of specified trusts into LLPs, in addition to existing pathways such as:

• Firm → LLP
• Company → LLP

The revised framework ensures that, upon conversion:

1. All assets, liabilities, rights, and obligations automatically vest in the LLP
2. The original entity is deemed dissolved
3. Contracts and legal proceedings continue without disruption

This enables seamless restructuring of existing entities, particularly investment and financial structures, into LLPs.

5. Digital-first compliance regime

The 2026 amendment reinforces a digital-first approach to corporate compliance by prioritizing electronic communication between companies and their members under the Companies Act, 2013.

a) Mandatory electronic delivery of documents

• Prescribed classes of companies are required to serve specified documents to members exclusively through electronic mode, in accordance with notified rules. Such delivery is deemed to constitute valid legal compliance.

b) Member option for alternate modes

• Members may request delivery of documents through a specific mode, including physical copies. Companies are permitted to levy a fee approved in a general meeting for such requests.

c) Rule-based implementation framework

• The applicability and operational aspects include the following:
• Classes of companies covered
• Categories of documents
• Mode and manner of delivery
• will be prescribed through rules, enabling a phased and flexible rollout.

6. Virtual & hybrid general meetings allowed

The proposed amendment introduces a formal framework that allows companies to conduct general meetings through physical, virtual, or hybrid modes under the Companies Act, 2013.

Companies can now hold both Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) either entirely through video conferencing or other audiovisual means, or in a hybrid format that combines physical and virtual participation, subject to prescribed conditions.

At the same time, the law requires companies to hold at least one AGM in physical mode every three years to preserve in-person governance standards.

7. Expanded definition of small companies

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The regulatory framework also revises the definition of small companies under the Companies Act, 2013, by increasing the prescribed financial thresholds.

Under the amended provisions:

• The paid-up share capital limit has been increased from INR 100 million (US$1.06 million) to INR 200 million (US$2.12 million)
• The turnover threshold has been raised from INR 1 billion (US$10.62 billion) to INR 2 billion (US$21.2 billion)

This expansion broadens the scope of companies eligible for the small company classification, enabling a larger number of entities to benefit from reduced compliance requirements and simplified regulatory obligations.

On December 1, 2025, the MCA expanded the definition of small companies. In this the limits for paid-up capital and turnover are INR 100 million (US$1.06 million) and INR 1 billion (US$10.62 billion).

8. CSR compliance relaxed

The law rationalizes the Corporate Social Responsibility (CSR) framework under the Companies Act, 2013, by increasing thresholds and introducing targeted compliance relaxations.

The amendment raises the net profit threshold for CSR applicability from INR 50 million to INR 100 million (or such higher amount as may be prescribed). This reduces the number of companies required to undertake CSR obligations. It also extends the timeline for transferring unspent CSR amounts related to ongoing projects from 30 days to 90 days, providing additional compliance flexibility.

9. Stronger audit oversight by NFRA

The proposed corporate bill enhances the regulatory powers of the National Financial Reporting Authority (NFRA) under the Companies Act, 2013, strengthening auditor accountability and independence.

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Auditors of prescribed classes of companies are now required to intimate registration details and file periodic returns with NFRA, with monetary penalties applicable for noncompliance. The authority is also empowered to take enforcement actions, including issuing directions, imposing penalties, and debarring auditors.

The amendment further reinforces auditor independence by restricting the provision of non-audit services and extending such restrictions for a period of three years post-audit tenure. Additionally, NFRA is authorized to engage domain experts to support its oversight functions.

10. Decriminalization & penalty rationalization

The 2026 bill also pivots toward a penalty-based compliance regime under the Companies Act, 2013, and the LLP Act, 2008, by decriminalizing select procedural defaults and introducing defined monetary penalties.

Key decriminalized areas

• Non-compliance with registrar requisitions (LLPs): Previously treated as an offense, it now attracts a fixed penalty of INR 10,000.
• Defaults relating to AGMs: Non-compliance with AGM requirements is now subject to monetary penalties instead of criminal prosecution.
• Inter-corporate loans and investments: Certain contraventions (sub-sections 9 and 10) are decriminalized and moved to a penalty framework.

New penalty structure

• Company-level penalties
  • INR 100,000 (US$1,062)  for contravention
  • Additional INR 500 (US$5.31) per day for continuing default
  • Maximum cap: INR 500,000 (US$5,312.9)
• LLP-related penalty example
  • INR 10,000 (US$106.29) for failure to comply with the registrar’s directions

Why this is relevant for companies is because the proposed legislation reduces the fear of criminal litigation for technical errors, allowing firms to focus on operational efficiencies rather than penalty concerns.

Bill referred to Joint Parliamentary Committee (JPC)

The Corporate Laws (Amendment) Bill, 2026, has now been referred to a JPC for detailed examination and recommendations.

The referral to the JPC indicates a more detailed legislative scrutiny process, with inputs expected on compliance simplification, penalty rationalization, and overall improvements to the corporate regulatory framework.

The central government’s intent to refine the proposed reforms through JPC review before final enactment.

Key takeaways

The bill advances a business-friendly, compliance-driven framework under the Companies Act, 2013, and the LLP Act, 2008.

• IFSC-specific LLP frameworks and foreign currency flexibility position India as a global financial hub.
• Digital compliance, virtual meetings, and foreign currency operations bring India closer to international standards.
• Expanded small company thresholds and CSR relaxations reduce burden on smaller entities.
• Enhanced role of the NFRA reinforces accountability and transparency.
• Expanded conversion routes enable efficient business restructuring.
• Decriminalization reduces litigation risk and ensures proportionate enforcement.
• Review by a JPC indicates scope for further refinement.

(US$1 = INR 94.10)

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